When recording a credit sale of $4,000, how is Accounts Receivable affected?

When recording a credit sale of $4,000, how is Accounts Receivable affected?

• A. Debited $4,000
• B. Credited $4,000
• C. Debited $0
• D. Credited $0

Answer: (A)

When you record a sale on credit, you’re creating a receivable, an asset that represents money owed to the business. Assets increase with a debit, so Accounts Receivable must be debited. For a credit sale of 4,000, you would debit Accounts Receivable for 4,000 and credit Sales Revenue for 4,000. This reflects that the customer now owes you money and that you’ve earned revenue. The other possibilities would either reduce Accounts Receivable (crediting it) or show no change (debiting or crediting 0), which doesn’t match a new credit sale.

When you record a sale on credit, you’re creating a receivable, an asset that represents money owed to the business. Assets increase with a debit, so Accounts Receivable must be debited. For a credit sale of 4,000, you would debit Accounts Receivable for 4,000 and credit Sales Revenue for 4,000. This reflects that the customer now owes you money and that you’ve earned revenue.

The other possibilities would either reduce Accounts Receivable (crediting it) or show no change (debiting or crediting 0), which doesn’t match a new credit sale.