Cool Taste Company recorded $5,000 in sales on account for the week. What effect does this transaction have on the accounting equation? a. $5,000 increase in assets and $5,000 decrease in owner's equity b. $5,000 increase in assets and $5,000 increase in owner's equity c. $5,000 increase in assets and $5,000 increase in liabilities d. no effect on the accounting equation

Question

Business

Chapman

14 February, 15:26

Cool Taste Company recorded $5,000 in sales on account for the week. What effect does this transaction have on the accounting equation? a. $5,000 increase in assets and $5,000 decrease in owner's equity b. $5,000 increase in assets and $5,000 increase in owner's equity c. $5,000 increase in assets and $5,000 increase in liabilities d. no effect on the accounting equation

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Cory Bowman · Answer 1

The correct answer is d. no effect on the accounting equation

Explanation:

The accounting equation is = Assets = Liabilities - Owner's Equity

The sale for $5,000 is recorded in a Profit and Loss Statement not in a Balance Sheet because is not an Assets or Liabilities nor Owner's Equity