Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

If sales revenue is credited in a journal entry, which of the following is most likely to be debited?

Accounts Receivable

Unearned Revenue

Sales Returns and Allowances

Retained Earnings

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Verified step by step guidance

Understand the nature of the transaction: When sales revenue is credited, it indicates that the company has earned revenue from selling goods or services. The corresponding debit entry will depend on the type of transaction and how the revenue was earned.

Consider the most common scenario: If the sale was made on credit (i.e., the customer has not yet paid), the debit entry would typically be to 'Accounts Receivable,' which represents the amount owed by the customer.

Evaluate other options: 'Unearned Revenue' is debited when revenue is recognized from a liability that was previously recorded, but this does not apply here since the revenue is already earned. 'Sales Returns and Allowances' is debited when goods are returned or allowances are given, which is not relevant to the initial recording of sales revenue. 'Retained Earnings' is not debited in this context, as it is part of equity and not directly involved in revenue recognition.

Apply the accounting equation: The journal entry for sales revenue on credit would typically be: Debit 'Accounts Receivable' (an asset account) and Credit 'Sales Revenue' (a revenue account). This aligns with the accrual basis of accounting, where revenue is recognized when earned, not necessarily when cash is received.

Confirm the correct answer: Based on the analysis, the most likely account to be debited when sales revenue is credited is 'Accounts Receivable,' as it reflects the amount owed by the customer for the sale made on credit.