What types of transactions give rise to accounts receivable?
Cash Basis of Accounting:
The cash basis of accounting is a simple approach to accounting for a business where transactions are recorded when cash exchanges hands. This method is ideal for a very simple business that deals in small cash sales, but can make it difficult to assess how valuable or profitable the business is.
Answer and Explanation:
A transaction where revenue is earned but cash does not exchange hands give rise to accounts receivable.
When a business makes a sale of goods or provides services and then gives the customer an invoice, the transaction is recorded as a debit to accounts receivable and a credit to revenue. Once the customer pays for the goods or services, cash is debited and accounts receivable is credited.
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Learn more about this topic:
from Accounting 101: Financial AccountingChapter 7 / Lesson 1