When does a bookkeeper credit accounts receivable and debit the bank account?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the Tracking Assets and Sales Test with comprehensive flashcards and multiple choice questions. Understand each concept with clear hints and explanations. Ace your exam confidently!

Multiple Choice

When does a bookkeeper credit accounts receivable and debit the bank account?

Explanation:
The moment you settle an outstanding invoice is when Accounts Receivable is credited and the Bank (cash) is debited. This mirrors the idea that you’re converting a receivable into actual cash: you reduce what customers owe you (credit AR) and increase your cash on hand (debit bank). The trigger for this entry is the payment of the invoice, not simply recording the sale, creating the receivable, or receiving cash from other sources. So, when an invoice is paid, you debit the bank account and credit accounts receivable.

The moment you settle an outstanding invoice is when Accounts Receivable is credited and the Bank (cash) is debited. This mirrors the idea that you’re converting a receivable into actual cash: you reduce what customers owe you (credit AR) and increase your cash on hand (debit bank). The trigger for this entry is the payment of the invoice, not simply recording the sale, creating the receivable, or receiving cash from other sources. So, when an invoice is paid, you debit the bank account and credit accounts receivable.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy