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24 April, 16:54

g Murphy Services performed electrical services for Harris Veterinary Clinic on account for $850. How would this transaction affect Harris Veterinary Clinic's accounting equation?

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  1. 24 April, 16:58
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    Asset = Equity + Liability

    Account Receivable (+850) = Service Revenue (+850) + No impact

    Explanation:

    Service performed on Account create a receivable and increase the service revenue. As we know a receivable is an asset, addition to the receivable will increase the total asset value. On the other hand the service revenue ultimately becomes the part of equity in the form of net income or retained earning. So, increase in service revenue will increase the equity value.
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