Which account is credited when a business receives cash from a debtor?
Correct answer: B. Debtor's account
- A. Cash account
- B. Debtor's account
- C. Sales account
- D. Capital account
Explanation
The debtor's liability is reduced when payment is received, so the debtor's personal account is credited. Cash is received and is therefore debited.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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