Question

When a company earns revenue on account _________.a. the asset account, accounts receivable, increases. b. A revenue account increases. c. liabilities are not affected. d. All of the answers are correct.

Answer 1

d. All of the answers are correct.

Step-by-step explanation:

The following accounts are effected

1. Revenue account

2. Account receivable account

3. Asset account

4. No impact on liabilities

Let us take an example. If sales are made on Ram account for $100,000

So, the journal entry would be

Account receivable - Ram A/c Dr $100,000

To Sales revenue A/c $100,000

(Being the credit sales is recorded)

It increases both above accounts plus there is no impact on liability which increase the asset account