Mulberry Company collected $7,000 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 $7,000; liabilities decrease by $7,000
B) assets increase by $7,000; assets decrease by $7,000
C) assets increase by $7,000; liabilities increase by $7,000
D) assets increase by $7,000; equity increases by $7,000

Question

Quizplus · Accepted Answer

When Mulberry Company collects $7,000 from a customer, its cash (an asset) increases by $7,000. Simultaneously, its accounts receivable (also an asset) decreases by $7,000 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 Company Collected $7,000 from One of Its Customers,the Amount