Cash Collection Impact on Financials

Question 3 A company collected $100,000 cash from a customer who both received and was billed for the goods last quarter.

Which of the following items would be increased by this cash collection transaction? (check all that apply)

0 / 1 point

Accounts Receivable

Total Stockholders’ Equity

Total Assets

Cash from Operations

Revenue

In the scenario described, the company collected cash from a customer who had already been billed for the goods. This means that the transaction affects the following items:

1. Cash from Operations - This will increase because the company received cash from a customer.
2. Total Assets - This will increase because cash (an asset) is increasing while accounts receivable (another asset) is decreasing by the same amount, resulting in a net increase in total assets.
3. Total Stockholders’ Equity - This will indirectly increase because the revenue recognized from the sale (which was already recorded when the goods were billed) contributes to net income, which in turn increases retained earnings, a component of stockholders' equity.

The other options would not be increased by this transaction:

• Accounts Receivable - This would decrease because the cash collection reduces the amount owed by the customer.
• Revenue - Revenue was already recognized when the goods were billed, so it does not increase again with the cash collection.

So, the correct answers are:

• Total Assets
• Cash from Operations
• Total Stockholders