If services are rendered for credit, then?
If services are rendered in exchange for credit, what impact does this have on the financial statements? Specifically, which of the following accounting elements will be affected:
- Will liabilities decrease?
- Will assets decrease?
- Will stockholders' equity increase?
- Will liabilities increase?
1 Answers
Jan 05, 2025
Stockholders' Equity Will Increase
The journal entry would be :
Debit 'Accounts Receivable' $XXX
Credit 'Service Revenue' $XXX
At the end of the year, that service revenue will be closed to an owners' equity account, increasing that equity account.
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