Question

Blue Company collected $2,000 cash for work completed. The effects on the accounting equation are:

A. total assets decrease, and equity increases

B. both total assets and total liabilities decrease

C. total assets, total liabilities, and equity are unchanged

D. both total assets and equity are unchanged

E. total assets increase and equity increases

Answer 1

Correct Option: E
Correct entry would be:
Accounts Name and Explanation	Debit	Credit	Effect
Cash	2,000		Asset increase
Service Revenue		2,000	Equity Increase
(To record Cash rec. for work completed)