What happens when a company collects cash from accounts receivable?
A) The asset accounts receivable increases.
B) Stockholders' equity increases.
C) Liabilities decrease.
D) Total assets are not affected.

Question

Quizplus · Accepted Answer

When a company collects cash from accounts receivable, it is essentially converting one asset (accounts receivable) into another asset (cash). This transaction does not affect the total assets, as the increase in cash is offset by a decrease in accounts receivable.

What Happens When a Company Collects Cash from Accounts Receivable