The collection in cash of interest receivable previously accrued has what effect on the basic accounting equation?
A)Increase assets,increase liabilities
B)Decrease assets,decrease liabilities
C)Increase assets,decrease liabilities
D)Increase liabilities,decrease stockholders' equity
E)It has no effect as one asset increases while another asset decreases.

Question

Quizplus · Accepted Answer

Collecting cash for previously accrued interest receivable does not affect the total assets, liabilities, or stockholders' equity. It merely shifts the composition of assets from interest receivable to cash, leaving the overall accounting equation unchanged.

The Collection in Cash of Interest Receivable Previously Accrued Has