The effect on the balance sheet when a debtor pays the amount that is owed is:
A) increase asset bank; increase equity.
B) increase asset bank; decrease asset debtor.
C) increase asset bank; decrease asset debtor; increase equity.
D) none of the above.

Question

Quizplus · Accepted Answer

When a debtor pays the amount that is owed, the company's bank balance (an asset) increases, and the debtor balance (also an asset, specifically accounts receivable) decreases. There is no direct effect on equity from this transaction.

The Effect on the Balance Sheet When a Debtor Pays