What Is the Effect on the Balance Sheet When the Business

question 54

Multiple Choice

What is the effect on the balance sheet when the business has cash sales of $12,000 of goods that were originally purchased for $8,000?

• A) increase the asset Bank by $12,000; increase equity by $12,000
• B) increase the asset Bank by $4,000; increase equity by $4,000
• C) increase the asset Bank by $12,000, decrease the asset Inventory by $8,000; increase equity by $4,000
• D) none of the above

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Definitions:

Licensing Agreement

Occurs when a firm pays a fee for the rights to make or sell another company’s products.

Manufacturing Technology

The machinery, equipment, and processes used in the production of goods, emphasizing efficiency and quality.

Patent

Legal protection granted to inventors, giving them exclusive rights to manufacture, use, or sell their invention for a certain period.

Central-Planning Economies

Economic systems where the government or central authority makes all decisions about the production and distribution of goods and services.