Collection on a portion of Accounts Receivable will: Select one: a. Increase total liabilities b. Not affect total assets c. Increase stockholders' equity d. Decrease net income e. Not affect total receivables

The correct answer is C.

Explanation:

Accounts Receivable simply refers to the amount of money owed to a business or an organization by it's debtors.

To make a collection simply means to retrieve some of these debts owed.

It cannot increase total liabilities because total liabilities is simply the amount of debt owned by a company to it's creditors. So Option A is out of it. It has the potential to increase total assets. Total assets refers to the total amount of assets owned by a person or an organization. Assets are items of economic value, which are expended over time to yield a benefit for the owner. The following are examples of assets which can be found in this category: Cash Marketable securities Accounts receivable Prepaid expenses Inventory Fixed assets Intangible assets Goodwill Other assets

Therefore, Option B is not the answer.

Following from the explanation above, D cannot be the answer. Neither is the answer Option E. Stockholders' equity is the amount of assets remaining in a business after all liabilities have been settled. Recall that cash is also categorized as an assets.

So when a client pays back a money owed to a business, cash is increased and the accounts receivable is decreased.

The transaction is recorded by debiting the cash account and crediting accounts receivable for exactly the same amount.

Cheers!