Accounts receivable is increased by:Select one:a.Debiting the accountb.Crediting the accountc.Not doing anythingd.Debiting or crediting any other account
Question
Accounts receivable is increased by:Select one:a.Debiting the accountb.Crediting the accountc.Not doing anythingd.Debiting or crediting any other account
Solution
The correct answer is:
a. Debiting the account
Here's why:
In accounting, accounts receivable is the money owed to a company by its debtors. When a company sells goods or services to a customer on credit, it creates an account receivable.
The double-entry bookkeeping system, which is used by most businesses, requires that every transaction be recorded in at least two accounts – one account is debited and another account is credited.
When a company records an account receivable, it increases (debits) the accounts receivable account and increases (credits) the sales revenue account.
Therefore, accounts receivable is increased by debiting the account.
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