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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

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

When delivery revenue is earned on account, which accounts increase or decrease?

(a) Cash increases; Revenue increases.

(b) Accounts Receivable increases; Revenue increases.

(c) Accounts Receivable increases; Revenue decreases.

(d) Accounts Receivable decreases; Revenue decreases.

To determine

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

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 (a), (c) and (d):

Cash increases; revenue increases, Accounts receivable increases; revenue decreases, Accounts receivable decreases; revenue decreases are incorrect options because when delivery revenue is earned on account both the accounts receivable and revenue account will increase.

Justification for the correct option:

Option (b):

Accounts receivable increases; revenue increase...

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