Earning revenue a. increases one asset, decreases another asset b. increases assets, increases owner's equity c. decreases assets, increases liabilities d. increases assets, decreases owner's equity

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Social Studies

Ashleigh Hunter

25 April, 01:29

Earning revenue a. increases one asset, decreases another asset b. increases assets, increases owner's equity c. decreases assets, increases liabilities d. increases assets, decreases owner's equity

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Alexandria Wiley · Answer 1

Option B) Increases Assets and Increases Owner's equity

Explanation:

When I get Earning Revenues the Total Assets increase because the sales are paid in Cash or it goes to the Account Receivables, in both cases increase the Total Assets.

On the other side of the equation we have the Total Liabilities plus the Equity, the impact of the increase in the Total Assets is reflected in Owner's Equity through the item Retained Earnings.

If I pay dividends, it decrease Owner's Equity and Total Assets, because Cash decrease too.