Nicholson Company sold inventory costing $1,000 for $3,000 on account.Nicholson Company operates under the accrual basis.What effect will the transaction have on the liabilities and owners' equity of the company?

Question

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Under the accrual basis, the sale increases revenue by $3,000 and cost of goods sold by $1,000, resulting in a net income increase of $2,000, which increases owners' equity.

Nicholson Company Sold Inventory Costing $1,000 for $3,000 on Account