What is the effect when services are performed on account?

When services are performed on account, it means that the business provides a service to a customer without requiring immediate payment, creating an accounts receivable. This increases the company's revenue and assets, as it recognizes the income earned, while also establishing a liability to collect the payment in the future. It reflects a trust-based relationship with customers and can impact cash flow if not managed properly. Ultimately, this practice can support business growth by allowing customers to access services they may not afford upfront.