Explore BrainMass

Explore BrainMass

    Impact of activity on the accounting equation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is the impact on the accounting equation of receiving a check from customers for work to be performed over the next three periods (none in this period)?

    A.
    Assets: increase
    Liabilities: increase
    Equity: no change

    B.
    Assets: increase
    Liabilities: no change
    Equity: increase

    C.
    Assets: increase
    Liabilities: decrease
    Equity: increase

    D.
    Assets: increase
    Liabilities: increase
    Equity: increase.

    © BrainMass Inc. brainmass.com June 4, 2020, 12:37 am ad1c9bdddf
    https://brainmass.com/business/accounting/impact-activity-accounting-equation-349637

    Solution Preview

    Answer: A

    Reasoning:

    If you receive a check but have not performed yet, you cannot record the revenue from this yet. ...

    Solution Summary

    Students often have trouble analyzing the impact of business events on the accounting equation and individual accounts. By improving this skill, they get better at recording transactions and thinking through the impact of events. This question helps them to practice how events impact the balance sheet areas (assets, liabilities and equity).

    $2.19

    ADVERTISEMENT