Genny is a small business owner. On 20 January she completes some work for a client on credit and sends the client an invoice for $250. On 10 February the client pays the account and Genny deposits the $250 into the business bank account. Assuming Genny prepares her financial statements each month, the receipt of cash on 10 February effects the accounting equation for Genny's business in the following way:
A) Cash at bank increases by $250; Equity increases by $250.
B) Cash at bank increases by $250; Accounts receivable decreases by $250.
C) Cash at bank increases by$250; Accounts receivable increases by $250.
D) Cash at bank increases by$250; Equity decreases by $250.

Question

Quizplus · Accepted Answer

The receipt of cash increases the Cash at bank account, while simultaneously decreasing the Accounts receivable account by the same amount, with no immediate effect on Equity.

Genny Is a Small Business Owner