Legal services were provided to a credit customer. How would this affect the accounting equation?
A) Cash and Accounts Receivable increase.
B) Accounts Payable and Capital increase.
C) Accounts Receivable and Revenue increase.
D) None of the above are correct.

Question

Quizplus · Accepted Answer

Legal services provided to a credit customer means that the company has performed a service and is now expecting payment from the customer in the future. This results in an increase in Accounts Receivable, which is an asset. The company has also earned revenue from providing the legal services, resulting in an increase in Revenue, which is equity. There is no change in cash or accounts payable as no payment has been received or made.

Legal Services Were Provided to a Credit Customer