Muddle Company performs a service for one of its customers and immediately collects the cash.This transaction will:
A)have no effect on liabilities.
B)decrease net income.
C)decrease Retained Earnings.
D)increase Accounts Receivable.

Question

Quizplus · Accepted Answer

Since the company immediately collected cash, there would be no impact on liabilities or Accounts Receivable. There would also be no decrease in Retained Earnings as a result of this one transaction. Additionally, without any expenses or cost of goods sold associated with providing the service, there would be no decrease in net income.

Muddle Company Performs a Service for One of Its Customers