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The Yankee Corporation has recently begun to accept credit cards. On July 7, Year 1, Yankee made a credit card sale of $600. The credit card company charges a fee of 3% for handling a credit card transaction.
-Which of the following correctly describes the effect of the collection of cash from the credit card company on the financial statements of Yankee Corporation?

Question

Quizplus · Accepted Answer

Collecting the amount due ($582) from the credit card company increases assets (cash) and decreases assets (accounts receivable - credit card company), resulting in no net effect on total assets, total liabilities, or stockholders' equity. It is reported as a cash inflow for operating activities.

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