Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 45)
If a business makes a cash sale of $500, what is the immediate impact on its accounting equation?
Assets decrease, equity increases.
Assets increase, equity increases.
Assets decrease, equity decreases.
Assets increase, equity decreases.
Explanation
Cash, an asset, increases and the company's equity (retained earnings) increases due to the revenue generated.
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