Which of the following statements is correct?

  1. Recording revenue results in an increase in assets or a decrease in liabilities.
  2. Recording revenue results in an increase in assets or a decrease in stockholders’ equity.
  3. Recording expenses results in a decrease in assets or a decrease in liabilities.
  4. Recording expenses results in an increase in assets or an increase in liabilities.

Answer a. Recording revenue results in an increase in assets or a decrease in liabilities

Explanation: In accounting, the right way to record in the books is revenues earned to increase the assets or decrease the liabilities.

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