When a sale is recorded on credit, what is the normal balance of the Sales account?

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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

When a sale is recorded on credit, what is the normal balance of the Sales account?

Explanation:
Revenue accounts have a credit normal balance. When a sale is recorded on credit, you increase revenue by crediting the Sales account, while the asset you’re increasing (Accounts Receivable) is debited. This keeps the Sales account with a credit balance, reflecting the income earned. Debiting Sales would reduce revenue, which isn’t how this account is meant to work; having a zero balance would only occur if there were no sales at all, and the normal balance doesn’t depend on the reporting period.

Revenue accounts have a credit normal balance. When a sale is recorded on credit, you increase revenue by crediting the Sales account, while the asset you’re increasing (Accounts Receivable) is debited. This keeps the Sales account with a credit balance, reflecting the income earned. Debiting Sales would reduce revenue, which isn’t how this account is meant to work; having a zero balance would only occur if there were no sales at all, and the normal balance doesn’t depend on the reporting period.

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