MCQ: Received Commission. Show Its Effect on the Accounting Equation
Received Commission: Effect on Accounting Equation (MCQ Explanation) Question: Received commission. Show its effect on the accounting equation. a. Assets and owner's equity goes down b. Assets and liabilities goes up c. Assets goes down and owner's equity goes up d. Assets and owner's equity goes up Correct Answer: d) Assets and owner's equity goes up Explanation: Effect of Received Commission on Accounting Equation When a business receives commission , it means the business has earned income by providing services to a customer. In accounting, earned commission is treated as revenue because it increases the profit of the business. A commission received transaction affects two accounts: Cash Account (Asset Account) Commission Received Account (Revenue Account) When cash is received: The Cash Account increases because money comes into the business. The Commission Received Account increases because the business earns revenue. According to the rules of debit and...