Montgomery equipment rental company received $1,000 cash from a customer; the amount was owed to the business from the previous month. what is the effect of this transaction on the accounting equation?

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Claire Lawrence

Business

31 August, 13:39

Montgomery equipment rental company received $1,000 cash from a customer; the amount was owed to the business from the previous month. what is the effect of this transaction on the accounting equation?

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Baldwin · Answer 1

The correct answer is that this payment will have no effect on the accounting equation.

The accounting equation is Assets=Liabilities + Owner's Equity. The journal entry for this transaction will be a debit to Cash and a credit to Accounts Receivable for $1,000. Since both of these accounts are Assets there will be no change to the asset balance.