A business collects cash from a customer on settlement of accounts receivable. Which of the following accounts will be debited?
A)Cash
B)Accounts Receivable
C)Service Revenue
D)Accounts Payable

Question

Quizplus · Accepted Answer

When a business collects cash from a customer on settlement of accounts receivable, it increases its cash balance. Therefore, the Cash account will be debited. Accounts Receivable is being settled or decreased, so it will be credited. Service Revenue is not affected in this transaction, and Accounts Payable is not relevant since it pertains to money that the business owes to suppliers.

A Business Collects Cash from a Customer on Settlement of Accounts