When cash is received on account, which entry is recorded?

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Multiple Choice

When cash is received on account, which entry is recorded?

Explanation:
When cash is received on account, the entry is to Debit Cash and Credit Accounts Receivable. This reflects increasing cash (an asset) and decreasing the amount owed by customers (another asset) as the receivable is settled. Revenue isn’t affected at this moment because it was recognized when the sale occurred; this transaction simply converts the receivable into cash. Debits and credits must balance, and this entry shows the conversion of a receivable into cash.

When cash is received on account, the entry is to Debit Cash and Credit Accounts Receivable. This reflects increasing cash (an asset) and decreasing the amount owed by customers (another asset) as the receivable is settled. Revenue isn’t affected at this moment because it was recognized when the sale occurred; this transaction simply converts the receivable into cash. Debits and credits must balance, and this entry shows the conversion of a receivable into cash.

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