"A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounting records?"

1. "Increase accounts receivable and cash by $1,000,000 each"

2. "Increase accounts receivable and retained earnings (revenue) by $1,000,000 each"

3. "Increase accounts receivable and accounts payable by $1,000,000 each"

4. "Increase cash and decrease accounts receivable by $1,000,000 each"