consider the following balance sheet: cash $70,000 Accounts payable $30,000 Acco
ID: 2697938 • Letter: C
Question
consider the following balance sheet: cash $70,000 Accounts payable $30,000 Accounts receivable $30,000 Long term debt $20,000 Inventories $50,000 Common stock $200,000 Net fixed assets $350,000 Retained earnings $250,000 Total assets $500,000 Total claims $500,000. Assume that the business uses $10,000 of its cash to pay for supplies that were ordered on credit terms and have already been received and booked (recorded on the balance sheet). WHich of the below statements reflects the resulting balance sheet change:
a. cash acct decreases by $10,000 ant retained earnings acct decreases by $10,000
b. cash acct decreases by $10,000 and accts payable acct decreases by $10,000
c. change to left side only
d. change to right side only
Explanation / Answer
b. cash acct decreases by $10,000 and accts payable acct decreases by $10,000
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