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9 May, 12:17

Company X paid Company Y for services to be performed in the following year. What effect would transaction have on Company Y's balance sheet? a. Assets Increase; Assets Decrease b. Assets Increase; Shareholders' Equity Increase c. Assets Increase; Liabilities Increase d. Liabilities Increase; Shareholders' Equity Increase

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  1. 9 May, 13:42
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    Option A Assets Increase; Assets Decrease

    Explanation:

    The reason is that the prepaid expenses are treated as assets which means if cash is decreased then the prepaid expenses would increase which is also an asset.

    The double entry would be:

    Dr Prepaid Assets XX

    Cr Cash Account XX
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Home » Business » Company X paid Company Y for services to be performed in the following year. What effect would transaction have on Company Y's balance sheet? a. Assets Increase; Assets Decrease b. Assets Increase; Shareholders' Equity Increase c.
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