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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

When delivery revenue is earned in cash, which accounts increase or decrease?

(a) Cash increases; Revenue increases.

(b) Cash decreases; Revenue increases.

(c) Cash decreases; Revenue decreases.

(d) Cash does not change; owner’s equity increases.

To determine

State the account that increase or decrease if delivery revenue is earned in cash.

Explanation

Revenues: Revenues are earnings from operations of a business. The operating activities are sale of goods and services, and rent revenue.

Justification for the incorrect options:

Option of (b), (c) and (d):

Cash decreases; revenue increases, Cash decreases; revenue increases, Cash does not change; owners’ equity increases are incorrect options because when delivery revenue is earned in cash both the cash and revenue account will increase...

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