Over a Period of Time, If Total Assets Increase by $27,000

question 26

Multiple Choice

Over a period of time, if total assets increase by $27,000 and total liabilities increase by $7,000, then owner's equity will be increased by

• A) $7,000.
• B) $34,000.
• C) $27,000.
• D) $20,000.
• E) none of these.

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Definitions:

Probability of Nonpayment

The likelihood that a debtor will default on their loan obligations, not repaying the principal or interest.

Revenue

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Cash Discount

Cash Discount is a deduction from the stated price of goods or services, offered to purchasers as an incentive for payment in cash or within a specified period.

Credit Policy Effects

The impact of a company's credit policy on its finances and sales, influencing factors like cash flow and customer loyalty.