Sold merchandise (perpetual)on account would have which effect on the following categories?
A)Total Accounts Receivable would increase.
B)Total revenues would be increased.
C)Total liabilities would increase.
D)A and B would definitely occur.

Question

Quizplus · Accepted Answer

Selling merchandise on account means that the company is extending credit to its customers and therefore increasing its Accounts Receivable (A). The revenue is recognized at the time of sale, even if payment is not received immediately, which means that Total Revenues (B) would also increase. However, selling merchandise on account would not increase Total Liabilities (C).

Sold Merchandise (Perpetual)on Account Would Have Which Effect on the Following