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Question 1: Only ONE of the following statements correctly describes the effect of a transaction on the financial statements. Which one?
a. The payment of a trade receivable by £20,000 will increase the liabilities by £20,000 and decrease equity by £20,000
b. Goods sold on credit for £8,000 will increase sales by £8,000 and increase trade receivables by £8,000
c. A debtor who pays an amount owed of £8,000 will result in an increase in sales by £8,000 and a decrease in trade receivables by £8,000
d. The purchase of a vehicle for £19,000 cash will increase assets by £19,000 and decrease equity by £19,000
Financial Statement Analysis and Preparation
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