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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

To state : The effect of collection of accounts receivable on equity. Introduction: The users of financial statements review the financial statements of the company and perform appropriate analysis to take appropriate decisions, whenever required. ‘ Balance Sheet ’ has three components of a company at a particular point of time. These are: Assets are the items that the company own. Liability is the obligation of the company. Equity is the net assets i.e. the difference between the assets and the liabilities. When the accounts receivables are collected the following journal entry is recorded: Particulars Debit ($) Credit ($) Cash Dr. Accounts receivable (Being accounts receivable collected.) This means that the balance in cash account increases and balance in accounts receivable decreases. Thus, equity account is not affected on collection of accounts receivable.

To state : The effect of collection of accounts receivable on equity. Introduction: The users of financial statements review the financial statements of the company and perform appropriate analysis to take appropriate decisions, whenever required. ‘ Balance Sheet ’ has three components of a company at a particular point of time. These are: Assets are the items that the company own. Liability is the obligation of the company. Equity is the net assets i.e. the difference between the assets and the liabilities. When the accounts receivables are collected the following journal entry is recorded: Particulars Debit ($) Credit ($) Cash Dr. Accounts receivable (Being accounts receivable collected.) This means that the balance in cash account increases and balance in accounts receivable decreases. Thus, equity account is not affected on collection of accounts receivable.

Solution Summary: The author explains the effect of collection of accounts receivable on equity.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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EBK HEALTHCARE FINANCE: AN INTRODUCTION

Ch. 4 - Prob. 1.1STQ Ch. 4 - Prob. 1.2STQ Ch. 4 - Prob. 1.3STQ Ch. 4 - Prob. 1.4STQ Ch. 4 - Prob. 2.1STQ Ch. 4 - Prob. 2.2STQ Ch. 4 - Prob. 2.3STQ Ch. 4 - Prob. 2.4STQ Ch. 4 - Prob. 2.5STQ Ch. 4 - Prob. 3.1STQ

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