If services are provided for credit, then equity will increase.

Here's why:

1. When services are provided for credit, it means that the company has performed services but has not yet received payment. Instead, the customer promises to pay at a later date.

2. This transaction increases the company's Accounts Receivable, an asset account, because the company now has a claim to future cash from the customer.

3. At the same time, the company's Service Revenue, an equity account, also increases. This is because the company has earned revenue from providing the services, even though it has not yet received cash.

4. Therefore, the company's equity increases because revenues increase equity.

5. This transaction does not affect liabilities, so they neither increase nor decrease.

6. While assets (Accounts Receivable) do increase, the question is asking for the effect on equity or liabilities, so the correct answer is that equity will increase.

Question

If services are provided for credit, then equity will increase.

Here's why:

1. When services are provided for credit, it means that the company has performed services but has not yet received payment. Instead, the customer promises to pay at a later date.

2. This transaction increases the company's Accounts Receivable, an asset account, because the company now has a claim to future cash from the customer.

3. At the same time, the company's Service Revenue, an equity account, also increases. This is because the company has earned revenue from providing the services, even though it has not yet received cash.

4. Therefore, the company's equity increases because revenues increase equity.

5. This transaction does not affect liabilities, so they neither increase nor decrease.

6. While assets (Accounts Receivable) do increase, the question is asking for the effect on equity or liabilities, so the correct answer is that equity will increase.

Knowee AI · Accepted Answer

If services are provided for credit, then equity will increase.

Here's why:

1. When services are provided for credit, it means that the company has performed services but has not yet received payment. Instead, the customer promises to pay at a later date.

2. This transaction increases the company's Accounts Receivable, an asset account, because the company now has a claim to future cash from the customer.

3. At the same time, the company's Service Revenue, an equity account, also increases. This is because the company has earned revenue from providing the services, even though it has not yet received cash.

4. Therefore, the company's equity increases because revenues increase equity.

5. This transaction does not affect liabilities, so they neither increase nor decrease.

6. While assets (Accounts Receivable) do increase, the question is asking for the effect on equity or liabilities, so the correct answer is that equity will increase.

If services are provided for credit, then: Group of answer choices assets will decrease. liabilities will increase. equity will increase. liabilities will decrease.

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