Consider the following transactions: I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
Total liabilities would be:
A)$1,200.
B)$81,200.
C)$98,000.
D)$80,000.

Question

Quizplus · Accepted Answer

Transaction I increases liabilities by $80,000, and transaction II increases accounts receivable which is a type of liability. However, transaction III decreases accounts receivable by $8,000, which means that the customer paid the amount owed, thereby decreasing the liability. Transaction IV does not affect liabilities. Therefore, the total liabilities are $80,000 + $10,000 - $8,000 = $82,000.

Consider the Following Transactions: I