18 a company provides services to customers on account for $2,400. indicate the amount of increases and…
18 a company provides services to customers on account for $2,400. indicate the amount of increases and decreases in the accounting equation.
Answer
Explanation:
Step1: Identify the accounting - equation elements
The accounting equation is Assets = Liabilities + Stockholders' Equity. When a company provides services on account for $2,400, it creates an accounts - receivable (an asset) and recognizes revenue (which increases stockholders' equity).
Step2: Determine the changes
Assets increase by $2,400 because accounts - receivable (an asset) increases. Liabilities remain unchanged as there is no liability - related transaction here. Stockholders' equity increases by $2,400 because revenue increases net income, and net income is part of stockholders' equity.
Answer:
Assets: +$2,400 Liabilities: $0 Stockholders' Equity: +$2,400