When a Business Makes a Sale on Account, the Asset

question 106

Multiple Choice

When a business makes a sale on account, the asset created is a(n) :

• A)revenue.
• B)expense.
• C)account receivable.
• D)account payable.

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Definitions:

Asset-Expense Relationship

The association between expenses incurred by a business and the assets used to generate revenue.

Prepaid Expense

An expense that has been paid in advance and is recognized as an asset until the service or good is consumed or used in the future.

Adjusting Entries

Entries recorded in journals at the conclusion of an accounting cycle to properly distribute revenues and expenses to the corresponding period.

Adjusting Entries

Entries made in the accounting records at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.