Question

Providing services and receiving cash will _________

A. Increase assets and increase liabilities.
B. Decrease assets and increase liabilities.
C. Decrease liabilities and increase stockholders' equity.
D. Increase assets and increase stockholders' equity.

Answer 1

Providing services and receiving cash increases assets due to the cash received and increases stockholders' equity through the revenue generated.

Step-by-step explanation:

When a company provides services and receives cash, it will experience an increase in assets due to the cash received, and an increase in stockholders' equity as a result of the income from providing services. This is because the transaction brings in cash, which is an asset, and the revenue generated contributes to an increase in stockholders' equity through retained earnings. Therefore, the correct answer to the question 'Providing services and receiving cash will _________' is D. Increase assets and increase stockholders' equity.