Income earned which is yet to be received results in _________________.

Increases in capital and increase in liability

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Decrease in liability and increase in capital

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Increase in asset and increase in liability

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Increase in capital and increase in asset.

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Solution

The correct option is D Increase in capital and increase in asset.
The Correct option is C.
Income received in advance which is yet to be credited are reported as a current liability. The accounting treatment of such transaction results in increase the asset, Cash for the amount received and a increase in to the liability account such as Customer Advances or Unearned Revenues.

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Similar questions

Q. Give one example of each of the following transactions:
(i) Increase in an asset and a liability.
(ii) Decrease in an asset and a liability.
(iii) Increase in assets and capital.
(iv) Decrease in assets and capital.

Give an example for each of the following types of transaction.
(i) Increase in one asset, decrease in another asset.
(ii) Increase in asset, increase in liability.
(iii) Increase in asset, increase in owner's capital.
(iv) Decrease in asset, decrease in liability.
(v) Decrease in asset, decrease in owner's capital.
(vi) Decrease in liabilities, increase in owner's capital.
(vii) Increase in one liability, decrease in another liability.
(viii) Increase in liabilities, decrease in owner's capital.

Q. An example of a Decrease in liabilities and increase in owner's capital is _________.

Q. With an increase of investment in fixed assets, there is a commensurate ________ in the working capital.

Q. An example of increase in assets and increase in owner's capital is __________.

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