What Would Be the Effect on the Accounts If the Business

question 97

Multiple Choice

What would be the effect on the 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:

Liabilities

Financial or legal obligations that an entity is required to pay or resolve in the future.

Promissory Note

A written promise to pay a specified sum of money to a designated party on demand or at a fixed or determinable future time.

Fictitious-Payee Rule

A legal principle that protects banks from liability when funds are withdrawn by a person not entitled to them, if the drawer's negligence contributed to the forgery.

Imposter Rule

A legal principle that addresses the liability for fraud when an impostor defrauds a third party.