Hi all,
Hope I can get some advice from the CPAs and other accounts out there. Have a question from QBank:
Q: Washburn Motors signs a contract to sell a $100,000 luxury sedan to be delivered next month, and receives a $20,000 cash down payment from the buyer. How will the transaction most likely affect Washburn’s assets and liabilities?
A: The answer says that Assets will increase because cash goes up, and Liabilities go up because of unearned revenue increasing.
No problems with the answer there. But I was wondering why there is no mention of accounts receivable. Is my understanding correct:
(A)
+20,000 (Cash)
+ 80,000 (Accounts Receivable)
(L)
+100,000 (Unearned Revenue)? |