BNC Company earns revenues and as a result collects cash.Which of the following financial statement elements increased?
A)Cash only
B)Stockholders' equity only
C)Liabilities
D)Cash and stockholders' equity

Question

Quizplus · Accepted Answer

When BNC Company earns revenues and collects cash, two financial statement elements increase: Cash and Stockholders' Equity. Cash increases because of the cash received from customers, while Stockholders' Equity increases because revenues increase net income, which in turn increases retained earnings, a component of Stockholders' Equity. Liabilities do not increase in this situation.

BNC Company Earns Revenues and as a Result Collects Cash