PRC-1 · Chapter 1 · Question 100 of 100
If 'Falcon Distributors' receives a cheque of Rs. 40,000 from a credit customer settling their account, what is the net impact on the 'Total Assets' figure of the business?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Total assets remain completely unchanged
Explanation
The receipt of a cheque increases the bank balance (an asset) by 40,000 but simultaneously decreases trade receivables (another asset) by 40,000. The net effect on total assets is zero.
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