Scelta multipla
The balance sheet is composed of which three accounts?
207
views
1. Introduction to Accounting
Fundamental Accounting Equation
Scelta multipla
What is the impact on the fundamental accounting equation when an accounts receivable is collected?
A
Assets increase and liabilities decrease.
B
Liabilities increase and assets decrease.
C
Assets decrease and equity decreases.
D
Assets remain unchanged; one asset (cash) increases while another asset (accounts receivable) decreases.
Guida verificata passo dopo passo1
Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation must always remain balanced.
Identify the transaction: Collecting accounts receivable means cash is received from a customer, which increases the cash account (an asset) and decreases the accounts receivable account (also an asset).
Analyze the impact on assets: Since one asset (cash) increases and another asset (accounts receivable) decreases by the same amount, the total assets remain unchanged.
Confirm there is no impact on liabilities or equity: This transaction does not involve liabilities or equity, so these components remain unaffected.
Conclude that the fundamental accounting equation remains balanced, as the increase in one asset is offset by the decrease in another asset, leaving total assets unchanged.
Video correlati
Pratica correlata
