The Business Earns $700 Of Consulting Revenue How Would These Earnings Affect The Total Equity Of A Business?
When the business earns $700 of Consulting Revenue (CR), then we debit cash account with $700 and credit consulting revenue account of $700. Here, consulting revenue account is increasing, as it is earning by the business by providing services to client. So, when Revenue is increased, we credit and when it decreases, we debit it. Here, cash account is also increasing as it is receiving by the business, so we debit it according to the Rules of Debit And Credit . The effect of this Business Transaction on Accounting Equation is that cash increases on asset side by $700, so total assets increased by $700 on left side while revenue affects Equity (E) as it is earned by the business due to the profitable activities of the owner of the business, so equity increases by $700 on right side or liabilities & equity side due to increase in consulting revenue account of $700 as shown below: Assets = Liabilities ...