What Would Be the Effect on Accounts If the Business

question 45

Multiple Choice

What would be the effect on accounts if the business provided services to a customer on account?

• A) An asset would be debited and an expense credited.
• B) Capital would be debited and revenue credited.
• C) An asset would be debited and revenue credited.
• D) An asset would be debited and Capital credited.

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Definitions:

Net Investment

The total amount spent by a company or economy on capital assets, minus depreciation. This indicates how much is being spent on new or replacement assets.

Accounts Receivable

Funds that customers owe to a business for products or services that have been provided but not yet compensated for.

Installation

The process of setting up and configuring hardware or software systems to make them ready for operation.

Earnings Before Taxes

An indicator of a company's financial performance calculated as revenue minus expenses, excluding taxes.