When Portia creates an invoice in QuickBooks for a customer sale on account, which journal entry is recorded?

• A. Debit Sales Revenue; Credit Accounts Receivable
• B. Debit Accounts Receivable; Credit Sales Revenue
• C. Debit Cash; Credit Sales Revenue
• D. Debit Sales Revenue; Credit Cash

Answer: (B)

Verified step by step guidance

1. Understand the nature of the transaction: Portia is creating an invoice for a customer sale on account. This means the customer has purchased goods or services but has not yet paid, creating an accounts receivable.
2. Identify the accounts involved: The two accounts affected are 'Accounts Receivable' (an asset account) and 'Sales Revenue' (a revenue account).
3. Determine the impact on Accounts Receivable: Since the customer owes money, Accounts Receivable increases. In accounting, an increase in an asset account is recorded as a debit.
4. Determine the impact on Sales Revenue: The sale generates revenue for the business. In accounting, an increase in a revenue account is recorded as a credit.
5. Record the journal entry: The journal entry for this transaction is 'Debit Accounts Receivable' and 'Credit Sales Revenue', reflecting the increase in assets and revenue.