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

Question

Quizplus · Accepted Answer

When a debtor pays the amount that is owed, there is a decrease in the asset "debtor" (as the amount owed is now paid) and an increase in the asset "bank" (since the payment is received). There is no effect on equity, as it is not directly impacted by this transaction. Therefore, option C is the correct choice.

The Effect on the Statement of Financial Position When a Debtor