The receipt of cash on account from a customer should be recorded as
A) a debit to Cash and a credit to Accounts Payable.
B) a debit to Cash and a credit to Income from Services.
C) a debit to Cash and a credit to Accounts Receivable.
D) a debit to Cash and a credit to the Capital account.
E) none of these.

Question

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When a customer pays on account, it means that they are paying off an Accounts Receivable balance. Therefore, the transaction should be recorded as a debit to Cash and a credit to Accounts Receivable. Option A is incorrect because Accounts Payable represents what the company owes to vendors or suppliers, not what customers owe to the company. Option B is incorrect because Income from Services is a revenue account, and receiving cash on account from a customer does not generate revenue. Option D is incorrect because the Capital account represents the owner's investment in the business and should not be impacted by the receipt of cash on account from a customer.

The Receipt of Cash on Account from a Customer Should