For recording a credit card sale, which entry is typically made?

For recording a credit card sale, which entry is typically made?

• A. Debit Revenue, Credit Cash
• B. Debit Cash or Accounts Receivable, Credit Revenue
• C. Debit Liabilities, Credit Revenue
• D. Debit Expenses, Credit Revenue

Answer: (B)

When a credit card sale occurs, you recognize the revenue earned and the asset you’re owed. If cash comes in right away from the card processor, you debit Cash and credit Revenue for the sale amount. If cash hasn’t arrived yet and you expect payment from the processor later, you debit Accounts Receivable and credit Revenue. Revenue is increased by credit, so the entry must pair an asset increase (debit) with a revenue increase (credit). The other options would either debit revenue (which lowers revenue), or debit liabilities or expenses (which don’t reflect the sale's effect on revenue). In practice, you may also handle card-processing fees separately, but the fundamental recording of the sale is as described.

When a credit card sale occurs, you recognize the revenue earned and the asset you’re owed. If cash comes in right away from the card processor, you debit Cash and credit Revenue for the sale amount. If cash hasn’t arrived yet and you expect payment from the processor later, you debit Accounts Receivable and credit Revenue. Revenue is increased by credit, so the entry must pair an asset increase (debit) with a revenue increase (credit). The other options would either debit revenue (which lowers revenue), or debit liabilities or expenses (which don’t reflect the sale's effect on revenue). In practice, you may also handle card-processing fees separately, but the fundamental recording of the sale is as described.