When a sale on credit is made under the accrual basis of accounting, at the time of the sale, how is the transaction recorded?
A)An increase in assets and an increase in liabilities
B)An increase in assets and an increase in revenues
C)An increase in liabilities and an increase in revenues
D)It is not recorded.

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, when a sale is made on credit, it is recorded as an increase in accounts receivable (asset) and an increase in revenue. Therefore, the best choice is B - an increase in assets and an increase in revenues.

When a Sale on Credit Is Made Under the Accrual