What Happens When a Company Collects Cash from Accounts Receivable

question 125

Multiple Choice

What happens when a company collects cash from accounts receivable?

• A)The asset accounts receivable increases.
• B)Stockholders' equity increases.
• C)Liabilities decrease.
• D)One asset increases and another asset decreases by an equal amount.

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Definitions:

Clasts

Pieces of rock or mineral fragments that are broken off from their parent source and are used in the creation of sedimentary rocks through the process of lithification.

Sedimentary Rocks

Rocks formed by the accumulation or deposition of mineral or organic particles at the Earth's surface, followed by compaction and cementation.

Conglomerate

A coarse-grained clastic sedimentary rock composed of rounded to sub-rounded clasts (pebbles, cobbles, and boulders) in a fine-grained matrix of sand and mud.

Breccia

A rock composed of large, angular fragments; typically formed in sedimentary environments, but can be formed by volcanic, hydrothermal, or tectonic processes.