If an entity receives cash from a customer for payment of an amount owing to them, what is the effect on the accounting equation?
A)Assets and liabilities both increase.
B)Assets and liabilities both decrease.
C)Assets and owners' equity both decrease
D)There is no effect on the accounting equation.

Question

Quizplus · Accepted Answer

Receiving cash from a customer for an amount owing increases one asset (cash) and decreases another asset (accounts receivable) by the same amount, resulting in no net effect on the accounting equation.

If an Entity Receives Cash from a Customer for Payment