C.Credit Inc.has billed its clients for services performed in October.In November, the company receives payments from the clients.What entry will it make upon receipt of the payments?

Question

Quizplus · Accepted Answer

When Credit Inc. receives payments from clients for services already billed (and presumably recorded as Accounts Receivable), the correct accounting entry is to debit Cash (increasing assets because they are receiving money) and credit Accounts Receivable (decreasing assets because the client's obligation to pay is fulfilled).

CCredit Inc