Player Company Sold Inventory Costing $900 for $1,400 on Account

question 186

Multiple Choice

Player Company sold inventory costing $900 for $1,400 on account. If Player Company operates under the accrual basis, what effect will the transaction have on the liabilities and owners' equity side of the balance sheet?

• A) There will be no effect since the sales and/or cost of goods sold are income statement accounts.
• B) Owners' equity will decrease by $900.
• C) Owners' equity will increase by $500.
• D) There will be no effect since the customer to whom the inventory was sold has not yet paid.

---

Definitions:

Hammer Handle

The handle or grip part of a hammer, designed for the user to hold and swing the tool.

Wrap

To cover or enclose something completely with a material, such as paper, fabric, or plastic, for protection or decoration.

Line Wrench

A specialized wrench designed for gripping and turning pipes or fittings without slipping.

Tubing Fittings

Connectors used to join sections of tubing in hydraulic or pneumatic systems, ensuring leak-free connections.