Recording the collection of accounts receivable from customers involves:
A) Debiting Accounts Receivable and crediting Cash
B) Debiting Cash and crediting Service Fees Earned
C) Debiting Cash and crediting Accounts Payable
D) Debiting Cash and crediting Accounts Receivable
E) None of the above

Question

Quizplus · Accepted Answer

When a company collects on accounts receivable, it is receiving cash from customers to whom it previously extended credit. This transaction increases the company's cash balance and decreases the accounts receivable balance. Therefore, the company debits Cash (to increase it) and credits Accounts Receivable (to decrease it).

Recording the Collection of Accounts Receivable from Customers Involves