Tori's Shop collects $250 of its accounts receivable. The expanded accounting equation impact is
A) Cash and Capital increase $250.
B) Cash and Revenue increase $250.
C) Cash increases and Accounts Receivable decreases $250.
D) Accounts Receivable decreases and Capital increases $250.

Question

Quizplus · Accepted Answer

When Tori's Shop collects $250 of its accounts receivable, it means that it receives cash from its customers. This increases the Cash account on the asset side of the expanded accounting equation. At the same time, the Accounts Receivable account, which represents the amount of money the business is owed by its customers, decreases because the business has received the payment. Therefore, the impact on the equation is that cash increases and accounts receivable decreases by $250.

Tori's Shop Collects $250 of Its Accounts Receivable