Shaun,Inc.received payment from a customer in June for a service that was provided during July.For the month of July,how will this be reflected in the basic accounting equation?
A)Assets will not change,liabilities will decrease,and stockholders' equity will increase.
B)Assets will increase,liabilities will increase,and stockholders' equity will not change.
C)Assets will increase,liabilities will not change,and stockholders' equity will increase.
D)Assets will decrease,liabilities will not change,and stockholders' equity will increase.

Question

Quizplus · Accepted Answer

In June,when the payment from the customer was received,the company would increase assets (Cash)and increase liabilities (Deferred Revenue).In July,revenues increase,which increases net income and the stockholders' equity account Retained Earnings.In addition,since the company fulfilled its obligation to perform the service,the related liability (Deferred Revenue)decreases.

Shaun,IncReceived Payment from a Customer in June for a Service