Receiving cash on account of $1,200 from a customer would include a:
A)debit to accounts receivable and a credit to service revenue for $1,200.
B)debit to cash and a credit to accounts receivable for $800.
C)debit to accounts payable and a credit to cash for $1,200.
D)debit to cash and a credit to accounts receivable for $1,200.

Question

Quizplus · Accepted Answer

When a business receives cash from a customer on account, it means the customer is paying off a portion of their outstanding balance. This transaction increases the business's cash account (asset) and decreases the accounts receivable (asset) since the customer now owes less money. The correct journal entry is a debit to cash (increasing assets) and a credit to accounts receivable (decreasing assets) for the same amount, $1,200, which matches option D.

Receiving Cash on Account of $1,200 from a Customer Would