Selling $130 of merchandise to a customer for $200 cash in a state where the sales tax rate is 4%:
A)Increases cash flow from operating activities by $208.
B)Increases total assets by $78.
C)Increases equity by $70.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

The transaction increases cash flow from operating activities by $208 ($200 - $130), increases total assets by $78 ($200 - $130), and increases equity by $70 ($200 - $130 - $4 (sales tax)).

Selling $130 of Merchandise to a Customer for $200 Cash