Question

Mize Company provided $45,500 of services on account, and collected $38,000 from customers during the year. The company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. How do these events impact the elements of the horizontal financial statements model?
A. Total equity would increase.
B. Total liabilities would increase.
C. Total assets would increase.
D. All of these answer choices are correct.

Answer 1

Answer:

D. All of these answer choices are correct

Explanation:

Use Accounting Equation

Events:                                   Assets  = Equity + Liabilities

Provided Services                +45,500  +45,500

Collection from customers  -38,000

                                             +38,000

Expenses on Account                           -37,000  +37,000

Payment against payable    -32,400                   -32,400

Net Impact                              13,100       8500        4600

Hence, It is proved that Assets, equity and liabilities are increased.