Customers made payments totaling $8,000 on their accounts.Which accounts are affected by this transaction?
A) Service Revenue and Retained Earnings increase by $8,000.
B) Cash and Service Revenue increase by $8,000. Liabilities and Customer Expense increase by $8,000.
C) Cash increases by $8,000 and Accounts Receivable decreases by $8,000. Revenue and Retained Earnings are unchanged.
D) Cash and liabilities decrease by $8,000.

Question

Quizplus · Accepted Answer

The transaction involves the receipt of payments by customers, which means the accounts impacted would be those related to cash and accounts receivable. Cash increases by $8,000, and accounts receivable, which represents the amount owed by customers, decreases by $8,000. Revenue and retained earnings are unchanged as they represent the earnings generated from prior transactions and are not affected by the receipt of payments.

Customers Made Payments Totaling $8,000 on Their Accounts