Concept explainers
What is the name of the account used to record sales of merchandise inventory?
Name the account that is used to record sales of merchandise inventory.
Explanation of Solution
Sale Transaction:
A sale transaction is a financial transaction in which the goods or services offered by an organization are transferred to its customers for a consideration. Sale transaction may involve elements of discount and taxes.
In a merchandising business goods are purchased by an entity and resold to its customers.
Accounts used to record sales of merchandise inventory are Sales account and Cash account. Sales transaction is recorded by debiting Cash account and crediting Sales account.
In case, sale is made on account instead of cash then, Accounts receivables account is debited instead of Cash account.
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