After posting the cleaning service revenue of $250, what is the new equity balance given initial equity is $5,000?

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Multiple Choice

After posting the cleaning service revenue of $250, what is the new equity balance given initial equity is $5,000?

Explanation:
Revenue increases owners' equity because it adds to net income, which raises retained earnings and thus the equity portion of the balance sheet. Recording $250 of cleaning service revenue lifts net income by $250, so retained earnings (and total equity) increase by the same amount. Starting with $5,000 in equity, adding $250 yields $5,250. If cash was received or not, the impact on equity remains a $250 rise. Therefore, the new equity balance is $5,250.

Revenue increases owners' equity because it adds to net income, which raises retained earnings and thus the equity portion of the balance sheet. Recording $250 of cleaning service revenue lifts net income by $250, so retained earnings (and total equity) increase by the same amount. Starting with $5,000 in equity, adding $250 yields $5,250. If cash was received or not, the impact on equity remains a $250 rise. Therefore, the new equity balance is $5,250.

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