Question

Accrued Revenues a. Increase Assets and Decrease Expenses b. Increase Revenues , decrease Assets, and increase Equity c. Increase Assets and Decrease Equity d. None of these answers are correct e. Increase Assets but they do not affect Equity

Answer 1

Accured Revenues :-

The correct answer is OPTION E i.e Increase Assets but they do not affect Equity.

Explanation :-

Accrued revenues are such incomes/ revenues which have been earned but not received. These are the assets of the company. They cannot be shown as revenues in the income statement as these are not received.
These can be shown in the balance sheet as accrued income/revenue.

Accrued revenues affects the balance sheet only by increase in assets and do not affect the equity in anyway.
So, all the above mentioned options like decrease expenses, decrease assets, increase equity, decrease equity etc are incorrect.

The only correct answer is OPTION E i.e increases Assets but they do not affect Equity.