What Is the Effect on the Statement of Financial Position

question 49

Multiple Choice

What is the effect on the statement of financial position when the business has cash sales of $15,000 of goods that were originally purchased for $10,000?

• A)Increase asset bank $12,000; increase equity $12,000.
• B)Increase asset bank $15,000; decrease asset inventory $10,000; increase equity $5,000.
• C)Increase asset bank $4,000; increase equity $4,000.
• D)None of the above.

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Definitions:

Pledge

A promise or agreement to do something, often backed by an assurance in the form of property or rights as a security for the fulfillment of an obligation.

UCC

The Uniform Commercial Code is a collection of legal guidelines that regulate business dealings across the United States.

Creditor

An individual or entity that is owed money or other forms of assets by a debtor.

Field Warehouse

A secured area within a business's premises that is operated by an independent warehousing company for storing pledged goods under a field warehousing agreement.