The business sells goods on credit for £500 which two accounts are affected?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

The business sells goods on credit for £500 which two accounts are affected?

Explanation:
When goods are sold on credit, you recognize the revenue earned and also record the amount owed by the customer as an asset. So the two accounts affected are an asset (trade receivables) and income (sales). The entry would be to increase trade receivables by £500 and increase sales by £500. Cash does not change yet because payment hasn’t been received, and purchases are not involved in a sales transaction.

When goods are sold on credit, you recognize the revenue earned and also record the amount owed by the customer as an asset. So the two accounts affected are an asset (trade receivables) and income (sales). The entry would be to increase trade receivables by £500 and increase sales by £500. Cash does not change yet because payment hasn’t been received, and purchases are not involved in a sales transaction.

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