Hypnosis Institute received payments from customers who had been billed earlier for services provided. What effect does this transaction have on the accounting equation?
A)Assets and liabilities increase.
B)Assets and stockholders' equity increase.
C)Assets and liabilities decrease.
D)There is no effect on the accounting equation, as one asset account increases while another asset account decreases.

Question

Quizplus · Accepted Answer

When Hypnosis Institute receives payments from customers who had been billed earlier, cash (an asset) increases while accounts receivable (another asset) decreases by the same amount, leaving the accounting equation unchanged.

Hypnosis Institute Received Payments from Customers Who Had Been Billed