Question

A business renders services to a client and issues a sales invoice. The amount will be collected from the customer at a later time. Which of the following is true at the time the invoice is issued?a)net income will increaseb) total liabilities will increasec) total assets will decreased) equity will decrease

Answer 1

Answer:

a) net income will increase

Explanation:

The business must record the Account Receivable (Debit – Asset increased) against de income for the Revenue (Credit – Equity increased). Then will record the loss for the Cost of Sold Goods (Debit – Equity decreased) against the exit of the sold goods (Credit – Asset – decreased). As the income (Revenue) will be larger than the loss (Cost of Sold Goods), the Net Income will be increased.