BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Because when a journal entry is made on a sale on account, the account receivable (asset account) is debited.

Detailed explanation-2: -Accounts Receivable – refers to sales that have occurred on credit, meaning that the company has not yet collected the cash proceeds from these sales.

Detailed explanation-3: -In journal entry form, an accounts receivable transaction debits Accounts Receivable and credits a revenue account. When your customer pays their invoice, credit accounts receivable (to clear out the receivable) and debit cash (to recognize that you’ve received payment).

Detailed explanation-4: -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-5: -Sales are recorded as a credit because the offsetting side of the journal entry is a debit-usually to either the cash or accounts receivable account. In essence, the debit increases one of the asset accounts, while the credit increases shareholders’ equity.