Blecker Corp.made cash sales to customers.What effect does this transaction have on the accounting equation?
A)Liabilities increase and stockholders' equity increases.
B)There is no effect on the accounting equation as one asset account increases while another asset account decreases.
C)Assets increase and liabilities increase.
D)Assets increase and stockholders' equity increases.

Question

Quizplus · Accepted Answer

Cash sales increase the company's assets (cash) and also increase the stockholders' equity through retained earnings or revenue. Therefore, Option D is the correct choice.