When Posting the Sales Journal's Activity at the End of the Month

question 150

Multiple Choice

When posting the sales journal's activity at the end of the month, its totals are:

• A) Debited to Sales and credited to Accounts Receivable.
• B) Debited to Accounts Receivable and credited to Sales.
• C) Debited to Accounts Receivable and credited to Cash.
• D) Debited to Cash and credited to Accounts Receivable.
• E) Debited to Cash and credited to Sales.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, especially concerning liquidity.

Current Assets

Resources anticipated to be turned into cash, sold, or used up within a year or throughout the typical operating cycle of the company.

Net Sales

Total sales revenue minus returns, allowances, and discounts.

Gross Profit

Gross profit refers to the difference between revenue and the cost of goods sold before administrative, overhead, and other expenses.