In financial accounting, Accounts Receivable should be increased for which of the following transactions?

• A. A credit sale of merchandise to a customer
• B. Collection of cash from a customer on account
• C. Receipt of a customer’s interest-bearing note (recorded as Notes Receivable)
• D. Writing off an uncollectible account under the allowance method

Answer: (A)

Verified step by step guidance

1. Understand that Accounts Receivable represents amounts owed to the company by customers from credit sales.
2. Identify that an increase in Accounts Receivable occurs when the company makes a credit sale, meaning goods or services are sold but cash has not yet been received.
3. Recognize that collecting cash from a customer on account decreases Accounts Receivable because the customer is paying off their debt.
4. Note that receiving a customer's interest-bearing note is recorded as Notes Receivable, a different account, so it does not increase Accounts Receivable.
5. Understand that writing off an uncollectible account reduces Accounts Receivable, so it does not increase it.