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Novosadov [1.4K]
3 years ago
13

Fitch Supply Services 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
Business
1 answer:
Solnce55 [7]3 years ago
7 0

Answer:

Decrease the accounts receivable account in assets section of balance sheet by $1,000

Increase the cash account in assets section of balance sheet by $1,000

Explanation:

The Accounting equation for any entity is represented by the following equation:

Assets= Equity + Liability

When the entity receive any amount from customer in respect of the any credit sale made to him, the account receivable in the asset section will be decreased by the that amount and the cash section in the asset section will be increased by that amount.

In this case, Fitch supply services shall

Decrease the accounts receivable account in assets section of balance sheet by $1,000

Increase the cash account in assets section of balance sheet by $1,000

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<h2>Question:</h2>

As the data in incomplete, lets consider the data found on the net for the same question

DATE         LIBOR

week 1        1.98%

week 2       1.64%

week 3       1.54%

week 4       1.31%

week 5       1.57%

week 6       1.69%

week 7       1.66%

week 8       1.94%

week 9       1.92%

(This data in not given in the question. If some values differ from this data, just change the that value in the method below and you'll get your answer)

<h2></h2><h2>Answer:</h2>

Floating rate = 0.25%

Maximum rate = 2.24%

Minimum rate = 1.71%

General formula for for finding rate of interest of a week

Week Rate = Previous Week's Rate (LIBOR from table) + Floating Rate

Lets find the values:

Week 2 rate  = Week 1 rate + 0.25%   = 1.98% + 0.25% = 2.23%

Week 3 rate  = Week 2 rate + 0.25%  = 1.64% + 0.25% = 1.89%

Week 4 rate  = Week 3 rate + 0.25%  = 1.54% + 0.25% = 1.79%

Week 5 rate  = Week 4 rate + 0.25%  = 1.31% + 0.25% = 1.56%

Week 5 rate is lower than the minimum rate, rate of Week 5 can be taken as minimum rate

Week 5 rate = 1.71%

Week 6 rate  = Week 5 rate + 0.25%  = 1.57% + 0.25% = 1.82%

Week 7 rate  = Week 6 rate + 0.25%  = 1.69% + 0.25% = 1.94%

Week 8 rate  = Week 7 rate + 0.25%  = 1.66% + 0.25% = 1.91%

Week 9 rate  = Week 8 rate + 0.25%  = 1.94% + 0.25% = 2.19%

Week 10 rate = Week 9 rate + 0.25%  = 1.92% + 0.25% = 2.17%

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Answer:

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Demand pull inflation can be started by A. an increase in the price of oil B. a decrease in the quantity of money. C. an increas
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