Additional sales of $2 million (cost price $1.5 million) are made on credit. This transaction will:

Question

Quizplus · Accepted Answer

The additional sales of $2 million will increase revenue and therefore increase net profit. However, since the sales are made on credit, cash will not be affected. Total assets will increase due to the increase in accounts receivable (an asset), but this does not necessarily mean that all total assets will increase. Therefore, option B is the best choice.

Additional Sales of $2 Million (Cost Price $1