Question

If a company receives $11,800 from a client for services provided, what would be the effect on the accounting equation?

1) Increase assets and increase liabilities
2) Increase assets and decrease liabilities
3) Decrease assets and increase liabilities
4) Decrease assets and decrease liabilities

Answer 1

When a company receives $11,800 from a client for services provided, the effect on the accounting equation is an increase in assets and increase in liabilities.

Step-by-step explanation:

The effect on the accounting equation when a company receives $11,800 from a client for services provided is an increase in assets and increase in liabilities.

Assets increase because the company receives cash from the client, which is considered an asset. Liabilities also increase because the company now owes the client the value of the services provided.

Therefore, the correct answer is option 1) Increase assets and increase liabilities.