Question

Collection of a $1 ,500 Accounts Receivable A. decreases a liability $1 ,500; increases owner's equity $1 ,500. B. increases an asset $1 ,500; decreases an asset $1 ,500. C. decreases an asset $1 ,500; decreases a liability $1 ,500. D. increases an asset $1 ,500; decreases a liability $1 ,500.

Answer 1

the correct answer is D. "increases an asset $1,500; decreases a liability $1,500.

Explanation:

When you collect $1,500 that someone owed you, it means you are getting the money you were supposed to receive.

Increases an asset because you now have $1,500 in cash that you didn't have before.

Decreases a liability because the amount someone owed you ($1,500) is no longer owed, so your financial obligations decrease by that amount.