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Anonymous

Feb 20, 2025

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

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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