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If a company is paid in full for services provided this month, how will the basis accounting equation be affected?

User Ahmed Niri
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Final answer:

When a company is paid in full for services provided this month, the basic accounting equation will be affected by an increase in assets and equity, but no change in liabilities.

Step-by-step explanation:

In accounting, the basic accounting equation is Assets = Liabilities + Equity. When a company is paid in full for services provided in a given month, it means that the company has received cash for the services rendered. This cash received is considered an asset and will increase the asset side of the equation. At the same time, since the company has been paid in full, there will be no outstanding liabilities related to the services provided, which means the liabilities side of the equation will not be impacted. Therefore, the increase in cash will lead to an increase in the equity side of the equation.

User Vincent Liou
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