BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Cash
|
|
|
Accounts Receivable
|
|
|
Service Revenue
|
Detailed explanation-1: -The correct answer is Accounts Receivable. The words ‘on account’ and ‘credit terms’ indicate that cash was not received. Right! The account Accounts Receivable should be debited in August.
Detailed explanation-2: -A credit sales journal entry is a type of accounting entry that is used to record the sale of merchandise on credit. The entry is made by debiting the Accounts Receivable and crediting the Sales account. The amount of the sale is typically recorded in the journal as well.
Detailed explanation-3: -On the income statement, the sale is recorded as an increase in sales revenue, cost of goods sold, and possibly expenses. The credit sale is reported on the balance sheet as an increase in accounts receivable, with a decrease in inventory.
Detailed explanation-4: -Debits increase asset, loss and expense accounts; credits decrease them. Credits increase liability, equity, gains and revenue accounts; debits decrease them.