Question

Evans Company sends invoices to all clients for services rendered for a total of $4,150. Required: What is the effect of this transaction on individual asset accounts, individual liability accounts, the Capital Stock account, and the Retained Earnings account?
A. An asset account increases.
B. An asset account decreases.
C. A liability account increases.
D. A liability account decreases.
E. Capital Stock increases.
F. Capital Stock decreases.
G. Retained Earnings increase.
H. Retained Earnings decrease.

Answer 1

Answer:

A. An asset account increases.

G. Retained Earnings increase.

Explanation:

The starting point for this analysis would be using the double entries for the transaction,hence the invoicing of customers would give rise to the below entries:

Dr  Receivables (asset increases)                        $4,150

Cr Sales revenue(increase in retained earnings)              $4,150

Ultimately, the correct options are A,an asset account increases and G retained earnings increase,since the sales revenue brings about net income that would be recorded as part of retained earnings at the close of the period under consideration