Concept:Receiving cash from a debtor converts one asset (debtor) into another asset (cash).
Explanation:When a debtor pays cash, the business receives cash, so the cash balance increases.
At the same time, the amount owed by the debtor is reduced, so debtors decrease.
This transaction affects only assets; total assets remain unchanged.
There is no effect on liabilities or capital.
Therefore, the correct effect on the balance sheet is an increase in cash and a decrease in debtors.
Answer:C. increase in cash and decrease in debtor.