Osborn Company provided services to a customer on account Wh

Osborn Company provided services to a customer on account. Which of the following represents the effect of this transaction on the financial statements? Assets Liab.Equity Rev. Exp. Net Inc. Cash Flow A) B) C) D) NA NA NA +NA - NA - =|

Solution

Providing services to customers on account, will have n effect with the following entry or Accounts:-

Accounts Receivable. Dr

To Service revenue

Accounts Receivable being an current asset - will increase assets side

Service revenue is an income which will increase in Revenue as well as increase in Common Stockholders equity .

Above transaction doesn\'t effect cashflow statement as it doesn\'t lead to cash flow as inflow or outflow.

Answer is option c)