What is the effect on the balance sheet of making cash sales of inventory to customers for profit?
A) Assets and stockholders' equity increase.
B) Assets and stockholders' equity decrease.
C) Assets decrease and stockholders' equity increases.
D) Assets increase and stockholders' equity decreases.

Question

Quizplus · Accepted Answer

When a company makes cash sales of inventory to customers for profit, its assets increase due to the cash received, and its stockholders' equity increases because the profit from the sale contributes to the company's retained earnings.

What Is the Effect on the Balance Sheet of Making