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A) Increase cash and liability B) Increase equity and liability C) Increase fixed assets and cashD) Increase cash and equity
Option D.,,,,,,,,,,,,,,,,,,,,,,,,,
Out of available options option D is the right answer.
Cash received for services rendered will increase the cash and equity.
D will be answer..............................................
Correct Answer is A) Increase cash and liability if cash received for services rendered.
The above answers would only make sense if the question was re-written like this:
"Cash received IN ADVANCE for services YET to be rendered will" etc.
As the question is written, all of the alternatives are incorrect.
It will increase cash and the equity.
The journal entry should be:
Cash (Dr) x,xxx.xx
Service Income (Cr) x,xxx.xx
Service Income is part of Equity.
D) Increase Cash and Equity ............................................................. cash received for services will form part of the organisation revenue which intend will contribute to the ascertainment of retained earnings after expense deduction. Retained earnings will be added to stated capital hence increase in equity.
My answer is D. Increases cash and equity
Cash received for services rendered is recorded through debit to cash and credit to sales (closed to equity).
