Part 1. a Business Sells $1,000 of Product on Account. Identify the Identify

question 19

Essay

Part 1.
A business sells $1,000 of product on account. Identify the effect on the accounting equation.
Part 2
A business buys $1,000 of product on account. Identify the effect on the accounting equation.

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Definitions:

Source of Cash

Any activity or operation within a business that generates cash inflow.

Inventory Acquisition

The process of obtaining and adding goods or materials to a company's stock for further sale or use.

Cash Increase

An uptick in the amount of liquid assets (cash and cash equivalents) that a company or individual has on hand.

Current Ratio

Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing current assets to current liabilities.