Becker Technologies invests $50,000 to acquire $50,000 face value,8%,five-year corporate bonds on January 2,2012.The bonds will mature on January 2,2017.The bonds pay interest semiannually on January 2 and July 2 each year until maturity.When Becker Technologies receives interest payments,how is the accounting equation affected?

Question

Quizplus · Accepted Answer

When Becker Technologies receives interest payments, the cash (asset) account will increase and the interest income (revenue) account will increase. This will result in an increase in equity due to the recognition of additional income. Therefore, the correct choice is D, equity will increase. There is no change in liabilities or total assets because the interest payments do not affect any other accounts in the accounting equation.

Becker Technologies Invests $50,000 to Acquire $50,000 Face Value,8%,five-Year Corporate