Question

When a company makes a sale and accepts a credit card payment from a customer, the...

When a company makes a sale and accepts a credit card payment from a customer, the company:

a debits Cash.

b credits Cash.

c credits Accounts Receivable.

Business   Accounting   
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Answer #1

The correct option is: Option a. debits Cash.

The other options b and c are incorrect.

Reason:

Credit card allow let customers buy now and pay the due later.

There are two method present in credit card sales. One is customer pays cash immediately and the second one is, he pays at a later date.

In first case, cash is debited for receipt of payment from customer.

In the second case, accounts receivable is debited.

In either case, accounts receivable is not debited and cash is not credited.

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