Asked by Dustin Politte on May 22, 2024
Verified
Land originally purchased for $30,000 is sold for $62,000 in cash. What is the effect of the sale on the accounting equation?
A) assets increase by $62,000; owner's equity increases by $62,000
B) assets increase by $32,000; owner's equity increases by $32,000
C) assets increase by $62,000; liabilities decrease by $30,000; owner's equity increases by $32,000
D) assets increase by $30,000; no change in liabilities; owner's equity increases by $62,000
Accounting Equation
The fundamental formula in accounting that states assets equal liabilities plus shareholders' equity, representing a company's financial position.
Owner's Equity
The total value that would accrue to a business's owners after all liabilities are subtracted from all assets; also known as shareholder's equity or net worth.
Liabilities
Economic debts or obligations a company is responsible for, which are to be paid off over time through the exchange of economic advantages.
- Examine the impact of different transactions on the balance of the accounting equation.
- Assess the impact of cash transactions on the accounting equation and the financial statements.
Verified Answer
Learning Objectives
- Examine the impact of different transactions on the balance of the accounting equation.
- Assess the impact of cash transactions on the accounting equation and the financial statements.
Related questions
How Does Paying a Liability in Cash Affect the Accounting ...
If Total Assets Decreased by $88,000 During a Period of ...
If Total Liabilities Decreased by $46,000 During a Period of ...
A Business Paid $7,000 to a Creditor in Payment of ...
Gomez Service Company Paid Its First Installment on a Note ...