If an Entity Receives Cash from a Customer for Payment

question 17

Multiple Choice

If an entity receives cash from a customer for payment of an amount owing to them, what is the effect on the accounting equation?

• A)Assets and liabilities both increase.
• B)Assets and liabilities both decrease.
• C)Assets and owners' equity both decrease
• D)There is no effect on the accounting equation.

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Definitions:

Higher-order Needs

Advanced human needs in Maslow's hierarchy, including esteem and self-actualization, beyond basic physiological and safety requirements.

Esteem

A respect and admiration, typically for a person, that results from their achievements or qualities.

Self-actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone. It is often viewed as the pinnacle of psychological development.

Hawthorne Studies

A series of studies conducted in the early 20th century that examined how different work conditions affected employee productivity and concluded that workers were more motivated by attention and social factors than physical conditions.