The asset created by a business when it makes a sale on account is termed
A) accounts payable
B) prepaid expense
C) interest revenue
D) accounts receivable

Question

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Accounts receivable is the asset created by a business when it makes a sale on account, meaning the customer does not pay immediately but instead agrees to pay at a later date. This asset represents the amount the customer owes the business and will be converted into cash when the customer pays the outstanding balance. Options A, B, and C do not relate to this transaction.

The Asset Created by a Business When It Makes a Sale