When Accounts Receivable Are Collected

question 81

Multiple Choice

When accounts receivable are collected:

• A)Stockholders' equity increases.
• B)Total assets increase.
• C)Total assets decrease.
• D)The amount of total assets is unchanged.

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Definitions:

Compounded Monthly

A calculation method for interest where the interest earned is added to the principal at the end of each month, causing subsequent interest to be based on the increased balance.

Effective Annual Rate

The real interest rate on an investment or loan, considering the effects of compounding over a year.

Effective Annual Rate

The yield on a loan or investment taking into account the impact of compounding throughout a year.

Compounded

In finance, referring to the process where interest is calculated on the initial principal and also on the accumulated interest from previous periods.