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8 March, 13:50

Assume that Global Cleaning Service performed cleaning services for a department store on account for $180. How would this transaction affect Global Cleaning Service's accounting equation?

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  1. 8 March, 13:52
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    This transaction affects positively in total assets and total equity.

    Explanation:

    Accounting equation: It is an equation in which total assets equals to total liabilities and owners capital

    In mathematically,

    Total assets = Total liabilities + owner's capital

    According to the accounting equation, the transaction will have a positive impact on the asset and equity, that means it would increase the balance of total assets and total equity by $180

    As we pass the journal entry so we debit the accounts receivable and credit the service / sales revenue.

    Hence, this transaction affects positively in total assets and total equity.
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