On December 1, Year 1, Jack's Snow Removal Company received $6,000 of cash in advance from a customer and promised to provide services for that customer during the months of December, January, and February. How will the Year 1 year-end adjustment to recognize the partial expiration of the contract impact the elements of the financial statements model?
A. Total liabilities will increase by $2,000.
B. Total assets will increase by $2,000 and equity will increase by $2,000.
C. Total assets will increase by $2,000.
D. Equity will increase by $2,000.
Answer: D
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