Which Accounts Are Affected, And In Which Direction, By The Following Business Transaction? For This Question, Ignore Inventory And Cost Of Goods Sold. Sale To A Customer On Credit, $4,500.
The correct options of this multiple choice question are 1) and 4) as when sales made to customer on credit worth $4,500, then this Business Transaction affects two types of accounts which are Accounts Receivable (AR) / Sundry Debtors (SD) and Sales Revenue. When sales is made, then the company earned the revenue whether the cash is received or not according to Accrual Basis of Accounting . As the payment is not received immediately from customer but a promise made from him to pay to the company within the specified time period, so the amount due from customer is created which is represented by accounts receivable which is a Current Asset and it is increasing, so we debit it. Sales revenue is also created as it is made so it is also increasing as a result, we credit it according to the Rules of Debit and Credit . The journal entry to record is shown below: ...