Diamond, Inc. had the following transactions during June: Performed services for $2,000 on account; received cash on account, $8,000; paid $700 for repair expense; paid $1,800 to a supplier that it owed from the previous month. What is the combined effect on Cash of these June transactions?
A) $5,500 increase
B) $5,500 decrease
C) $8,000 increase
D) $2,500 decrease

Question

Quizplus · Accepted Answer

The combined effect on Cash from these transactions is calculated as follows: +$2,000 (services performed on account does not affect cash) +$8,000 (cash received) -$700 (repair expense paid) -$1,800 (paid to supplier) = +$5,500. Therefore, there is a $5,500 increase in Cash.