Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 40 - No. 42)
What is the effect on the accounting equation when a company sells goods for cash?
Assets increase, Liabilities increase, Equity stays the same
Assets increase, Liabilities decrease, Equity increases
Assets decrease, Liabilities increase, Equity increases
Assets increase, Equity increases
Explanation
The sale of goods increases both cash (an asset) and sales revenue (increases equity).
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