Topics, 100 Accounting Resources, 100 Lecture List
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A transaction for work completed on account using accounting equation. Effect on the accounting equation for the transaction of completing work but not yet receiving cash, receiving an IOU instead called accounts receivable A/R. The transaction will increase account receivable (AR), an asset account, and increase revenue (equity account), revenue increasing even though cash has not been received because this is the point in time that work has been done and therefore revenue has been earned under the revenue recognition principle. The transaction increases the left side to the accounting equation increasing assets with AP going up and increase the right side of the equation increasing equity through the increase in revenue.