The Collection of an Account Receivable Is Recorded by a Debit

question 136

Multiple Choice

The collection of an account receivable is recorded by a debit to Cash and a credit to Accounts Payable.If this error is not corrected:

• A)Total liabilities are understated.
• B)Total assets are understated.
• C)Total liabilities are overstated.
• D)Owners' equity is overstated.

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Definitions:

Quantity Demanded

The aggregate quantity of a product or service that customers are ready and able to buy at a specific price point within a certain timeframe.

Elastic

Describes a situation where the quantity demanded or supplied of a good changes significantly in response to price changes.

Demand

The willingness and ability of consumers to purchase goods or services at various price levels.

Revenue

The earnings a company garners from its principal operations, often through selling products and services to its clientele.