BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Answer and Explanation: Assets created by selling goods and services on credit are accounts receivable. Selling a company’s products on credit is commonplace in today’s business environment. The selling company provides the goods or service to the recipient company along with an invoice.

Detailed explanation-2: -Trade receivables are defined as the amount owed to a business by its customers following the sale of goods or services on credit. Also known as accounts receivable, trade receivables are classified as current assets on the balance sheet.

Detailed explanation-3: -Definition of Sale on Credit This is also referred to as a sale on account. Normally, this means that the company selling the goods is transferring ownership of its goods to the buyer and in return has a current asset known as accounts receivable.

Detailed explanation-4: -Accounts receivable represent convertible assets owed to the company. That is, they describe a financial resource that can be converted to cash in the near future, once the customer has paid. An asset is any resource that provides monetary value to a business.

Detailed explanation-5: -The amount of accounts receivable is increased on the debit side and decreased on the credit side. When cash payment is received from the debtor, cash is increased and the accounts receivable is decreased. When recording the transaction, cash is debited, and accounts receivable are credited.