When recording a credit sale, which accounts are affected?

• A. Cash and Accounts Payable
• B. Accounts Receivable and Inventory
• C. Cash and Sales Revenue
• D. Accounts Receivable and Sales Revenue

Answer: (D)

When a sale is made on credit, you’ve earned revenue but haven’t received cash yet, so you record an asset and recognize income. Debit Accounts Receivable to show the amount the customer owes you, and credit Sales Revenue to reflect the income from the sale. Cash isn’t affected until the customer pays. Later, when payment comes in, you would debit Cash and credit Accounts Receivable. (Inventory would only come into play if you also record the cost of the goods sold in a separate entry.) So the accounts impacted by the credit sale entry are Accounts Receivable and Sales Revenue.