Asked by Michael Kumlien on Jun 27, 2024
Verified
Viscount Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:
A) Total assets decrease and equity increases.
B) Both total assets and total liabilities decrease.
C) Total assets, total liabilities, and equity are unchanged.
D) Both total assets and equity are unchanged and liabilities increase.
E) Total assets increase and equity decreases.
Accounting Equation
The accounting equation is a fundamental principle of accounting that represents the relationship between an entity's assets, liabilities, and equity (Assets = Liabilities + Equity).
- Understand how transactions influence accounts receivable, accounts payable, and cash movements.
Verified Answer
MA
MUHAMMAD ABRAR BHATJun 29, 2024
Final Answer :
C
Explanation :
Collecting cash on accounts receivable does not change the total assets, total liabilities, or equity. It merely shifts the composition of the assets from accounts receivable to cash, leaving the overall accounting equation unchanged.
Learning Objectives
- Understand how transactions influence accounts receivable, accounts payable, and cash movements.
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