Collected a Payment from a Credit Customer: This Will Be

question 112

Multiple Choice

Collected a payment from a credit customer: This will be recorded with

• A) a credit to an asset account.
• B) a credit to a liability account.
• C) a credit to Capital.
• D) None of these are correct.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.

Current Liabilities

Liabilities expected to be settled within one year or within the normal operating cycle of the business, such as accounts payable and short-term loans.

Current Ratio

A measure used to determine a company's potential to fulfill obligations due within one year by calculating the ratio of its current assets to its current liabilities.

Indicator Of Liquidity

Measures that indicate how easily a company can convert its assets into cash to cover short-term obligations.