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 increase
b) total liabilities will increase
c) total assets will decrease
d) equity will decrease

Answer 1

Answer:

a) net income will increase

Explanation:

According to my research on different financial processes, I can say that based on the information provided within the question in this situation net income will increase. This is because at the time the sales invoice is issued, the client has not paid. Therefore once he pays in the future the business will receive that money and in term cause the net income to increase. Net income is what remains of a company's revenue after subtracting all costs, in other words the earnings of the business.

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Answer 2

Answer:

Option d) equity will decrease

Explanation:

The value of goods and services have a certain shelf-life. In other words, the goods have their highest value whilst they are on the shelves or before the invoice is issued out. This is the equity of the property or services. However, as soon as that invoice is written down, the value of the goods will not be equal, in some cases, to how they were a few days ago. Here is an example:

When someone's house is worth $ 200 000 and the person owes the back $ 180 000. The house has an equity of $ 20 000.