When cash is received from a customer paying on account, which account is debited?

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Study for the Accounting CBE Exam. Gain insights with flashcards and multiple-choice questions, each paired with detailed explanations. Prepare for your accounting certification!

Multiple Choice

When cash is received from a customer paying on account, which account is debited?

Explanation:
When cash is received from a customer paying on account, the cash asset increases, so it is debited. In double-entry accounting, increases in assets are recorded with a debit. At the same time, the amount the customer owed (accounts receivable) decreases, which is recorded as a credit. This pairing shows the cash coming in to settle the receivable. The other accounts aren’t involved in this specific transaction: revenue is recognized when the sale occurs, and owner’s capital reflects equity, not the collection of receivables.

When cash is received from a customer paying on account, the cash asset increases, so it is debited. In double-entry accounting, increases in assets are recorded with a debit. At the same time, the amount the customer owed (accounts receivable) decreases, which is recorded as a credit. This pairing shows the cash coming in to settle the receivable. The other accounts aren’t involved in this specific transaction: revenue is recognized when the sale occurs, and owner’s capital reflects equity, not the collection of receivables.

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