Mulberry Corporation collected $16,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Mulberry?
A) Assets increase by $16,000; liabilities decrease by $16,000.
B) Assets increase by $16,000; assets decrease by $16,000.
C) Assets increase by $16,000; liabilities increase by $16,000.
D) Assets increase by $16,000; equity increases by $16,000.

Question

Quizplus · Accepted Answer

When Mulberry Corporation collects $16,000 from a customer, its cash (an asset) increases by $16,000. However, its accounts receivable (also an asset) decreases by $16,000 because the customer's debt is settled. There's no change in liabilities or equity; it's merely an asset exchange within the accounting equation.

Mulberry Corporation Collected $16,000 from One of Its Customers, the Amount