When revenue is earned from charge account sales, the accountant:
A)debits Cash and credits a revenue account.
B)debits Accounts Receivable and credits a revenue account.
C)debits a revenue account and credits the capital account.
D)debits a revenue account and credits Accounts Receivable.

Question

Quizplus · Accepted Answer

When revenue is earned from charge account sales, the accountant debits (reduces) the Accounts Receivable account (since the customer now owes less) and credits (increases) a revenue account to recognize the income earned. Cash is not involved in this transaction since it is a charge account sale, meaning the customer will pay at a later date. Choice A is incorrect because cash is not involved. Choice C is incorrect because revenue and capital accounts are not related in this transaction. Choice D is incorrect because Accounts Receivable should be debited, not credited.

When Revenue Is Earned from Charge Account Sales, the Accountant