The business collects a $5,000 account receivable from its customer.How is the accounting equation affected?
A) Assets increase $5,000; liabilities decrease $5,000.
B) One asset increases by $5,000; another asset decreases $5,000.
C) Assets increase $5,000; liabilities increase $5,000.
D) Assets increase $5,000; owner's equity increases $5,000.

Question

Quizplus · Accepted Answer

When a business collects an account receivable, its cash (an asset) increases by the amount collected, while its accounts receivable (another asset) decreases by the same amount. There is no impact on liabilities or owner's equity in this transaction.

The Business Collects a $5,000 Account Receivable from Its Customer