When a business makes a sale on account, the asset created is a(n):
A)revenue.
B)expense.
C)account receivable.
D)account payable.

Question

Quizplus · Accepted Answer

A sale on account means that the customer will pay in the future, creating a debt owed to the business. This debt is called an accounts receivable, which is an asset on the business's balance sheet. Option A, revenue, is the income earned from the sale, but not the asset created. Option B, expense, is a cost incurred by the business, but not related to a sale on account. Option D, accounts payable, would be created if the business purchases something on credit from a supplier, not if it makes a sale on account to a customer.

When a Business Makes a Sale on Account, the Asset