When does a bookkeeper credit accounts receivable and debit the bank account?

When does a bookkeeper credit accounts receivable and debit the bank account?

• A. When an invoice is paid
• B. When an invoice is recorded
• C. When a sale occurs
• D. When cash is received

Answer: (A)

The moment you settle an outstanding invoice is when Accounts Receivable is credited and the Bank (cash) is debited. This mirrors the idea that you’re converting a receivable into actual cash: you reduce what customers owe you (credit AR) and increase your cash on hand (debit bank). The trigger for this entry is the payment of the invoice, not simply recording the sale, creating the receivable, or receiving cash from other sources. So, when an invoice is paid, you debit the bank account and credit accounts receivable.