Customers paid $8,000 on their accounts.Which accounts are affected by this transaction?
A)Revenue and Retained Earnings increase $8,000.
B)Cash and Revenue increase $8,000.Liabilities and Expense increase $8,000.
C)Cash increases $8,000 and Accounts Receivable decreases $8,000.Revenue and Retained Earnings are unchanged.
D)Cash and liabilities decrease $8,000.

Question

Quizplus · Accepted Answer

This transaction involves a customer paying their account, which means they are settling an accounts receivable balance. Cash increases as the customer pays, while accounts receivable decreases by the same amount. Revenue and retained earnings do not increase, as this transaction simply represents the collection of already earned revenue. There is no indication that liabilities or expenses increase, and there is no mention of any decrease in liabilities other than accounts receivable. Therefore, the best choice is C.

Customers Paid $8,000 on Their Accounts