Boone's Cleaning Service performed cleaning services during December 2019,but had not collected any cash from its customers as of December 31,2019.What impact did performing these services have on the accounting equation?

A) Performing the service increased assets and increased liabilities.
B) Performing the service increased assets and increased stockholders' equity.
C) Performing the service increased assets and decreased stockholders' equity.
D) Performing the service decreased liabilities and decreased stockholders' equity.

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Katell Guillou · Accepted Answer

Final Answer : B, Explanation :  Performing the service increased the company's assets (i.e., accounts receivable) as it now has a claim on cash that will be received from customers in the future. At the same time, there was no impact on liabilities, since the company had not yet incurred any obligation to pay its creditors or suppliers. Finally, performing the service has not decreased the stockholders' equity, which is a residual claim on the assets after deducting liabilities. Therefore, performing the services increased assets and increased stockholders' equity.

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