The Business Collects a $5 000 Account Receivable from Its

question 84

Multiple Choice

The business collects a $5 000 account receivable from its customer. How is the accounting equation affected?

• A)One asset increases by $5 000; another asset decreases $5 000.
• B)Assets increase $5 000; liabilities decrease $5 000.
• C)Assets increase $5 000; liabilities increase $5 000.
• D)Assets increase $5 000; owners' equity increases $5 000.

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Definitions:

Materials Purchases

involves the acquisition of raw materials required for the production process, an essential part of managing manufacturing inputs.

Cash Collections

The process of gathering all cash received from sales, services, or other business activities.

Production Budget

An estimate of the total output, costs, and resources required for production within a specific period to meet forecasted demand.

Cash Receipts

Cash inflows or money received by a business from various sources, including sales, investments, and financing activities.