Question

Assume that Global Cleaning Service performed cleaning services for a department store on account for​ $180. How would this transaction affect Global Cleaning​ Service's accounting​ equation? A. Increase both assets and liabilities by​ $180 B. Increase both assets and equity by​ $180 C. Increase both liabilities and equity by​ $180 D. Decrease liabilities by​ $180, and increase equity by​ $180

Answer 1

B. Increase both assets and equity by​ $180

Step-by-step explanation:

Since Global cleaning service performed cleaning services for a departmental store for account for $180

So this transaction would be recorded as

Account receivable $180

To Service revenue $180

(Being the service performed is recorded)

By passing this journal entry, it increases the balance of the asset and together with it the equity balance is also increases due to an increase in service revenue