Mize Company provided $45,500 of services on account, and collected $38,000 from customers during the year. The company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. How do these events impact the elements of the horizontal financial statements model?
A)Total assets would increase.
B)Total liabilities would increase.
C)Total equity would increase.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

The company provided services on account, which increases accounts receivable (an asset). The company also incurred expenses on account, which increases accounts payable (a liability). The company collected cash from customers, which increases cash (an asset) and decreases accounts receivable (an asset). The company paid cash to creditors, which decreases cash (an asset) and decreases accounts payable (a liability). Overall, total assets would increase, total liabilities would increase, and total equity would increase.

Mize Company Provided $45,500 of Services on Account, and Collected