What Is the Effect on the Statement of Financial Position

question 9

Multiple Choice

What is the effect on the statement of financial position when the business has cash sales of $12,000 of goods that were originally purchased for $8,000?

• A) Increase asset bank $12,000; increase equity $12,000.
• B) Increase asset bank $12,000; decrease asset inventory $8,000; increase equity $4,000.
• C) Increase asset bank $4,000; increase equity $4,000.
• D) None of the above.

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Definitions:

Price

The amount of money required to purchase a good or service, determined by various market and economic factors.

Scarce Resources

Essential inputs that are available in limited quantities for the production of goods and services, leading to the problem of allocation.

Law of Demand

Economic principle stating that, ceteris paribus, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa.

Unlimited Wants

The economic concept that human desires and needs are endless and vary in nature, leading to constant demand for goods and services.