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18 December, 14:14

A corporation received $550 from a customer as a deposit and the company uses cash basis accounting. The effect of this transaction is to:

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  1. 18 December, 14:28
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    Increase assets

    Explanation:

    Given that

    Amount received = $550

    Since the amount is received from a customer $550 that increase the cash balance which ultimately increases the asset account so we debited the cash account and credited the account receivable account

    The journal entry would be

    Cash A/c Dr $550

    To Account receivable A/c $550

    (Being the cash is received from a customer)
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