What entry records cash received of $1,800 against accounts receivable?

• A. Debit Cash $1,800, Credit Accounts Receivable $1,800.
• B. Debit Accounts Receivable $1,800, Credit Cash $1,800.
• C. Debit Cash $1,800, Credit Service Revenue $1,800.
• D. Debit Service Revenue $1,800, Credit Cash $1,800.

Answer: (A)

When cash is received from a customer on account, you increase cash and decrease the amount the customer owes. Cash is a asset, so you debit it, while accounts receivable is also an asset that decreases as the customer pays, so you credit it. The correct entry is Debit Cash 1,800; Credit Accounts Receivable 1,800. This records the conversion of a receivable into cash and does not affect revenue, since revenue was already recognized when the service was performed.

The other options would either increase accounts receivable (which would undo the collection) or affect revenue (which would misstate the transaction).