ACCA Applied Knowledge · Financial Accounting · General ledger accounts and journal entries
Which of the following is the effect of a transaction in which a business receives $5,000 cash from a customer, Dalby, in settlement of a balance already recorded as receivable?
Total assets are unchanged. Bank increases by $5,000 while trade receivables decrease by the same amount, so one asset is simply swapped for another. No new revenue is recognised on receipt, because the sale was recorded earlier.
- ATotal assets are unchangedCorrect
- BTotal assets increase by $5,000
- CTotal liabilities decrease by $5,000
- DProfit increases by $5,000
Explanation
Cash rises by $5,000 (debit bank) and receivables fall by $5,000 (credit receivables), so total assets are unchanged. Revenue was already recognised when the sale was made, so profit does not increase now, ruling out D.
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