Question

JME Corporation bills its customers when services are rendered and recognizes revenue at the same time. This event causes an

Increase in assets.
Increase in net income.
Increase in retained earnings.
All of the above

Answer 1

Billing customers and recognizing revenue at the same time results in an increase in assets, net income, and retained earnings for JME Corporation.

Step-by-step explanation:

When JME Corporation bills its customers as services are rendered and recognizes revenue at that time, several financial changes occur:

• There is an increase in assets due to the increase in accounts receivable or cash, depending on whether the customer is billed or pays immediately.
• There is an increase in net income because revenue contributes to profits.
• There is an increase in retained earnings, which are part of shareholder's equity, since net income, after dividends, is added to retained earnings.

Therefore, the correct answer to the question is 'All of the above', as billing customers and recognizing revenue increases a company's assets, net income, and retained earnings.