Question

Earning revenue ____________________ a. decreases assets, increases liabilities b. increases assets, decreases stockholders' equity c. increases one asset, decreases another asset d. increases assets, increases stockholders' equity

Answer 1

d. increases assets, increases stockholders' equity

Step-by-step explanation:

The journal entry for earning revenue is shown below:

Cash A/c Dr. XXXXX

To Sales revenue A/c XXXXX

(Being revenue is earned)

Since the revenue is earned so we debited the cash account which increases the asset balance and credited the sales revenue account which increases the stockholders' equity balance.