Question

Sold goods on credit

Answer 1

Sales are a part of everyday business, they can either be made in cash or credit. In a dynamic environment, credit sales are promoted to keep up with the cutting edge competition. Accounting and journal entry for credit sales include 2 accounts, debtor and sales. In case of a journal entry for cash sales, cash account and sales account are used.

The person who owes the money is called a “debtor” and the amount owed is a current asset for the company. Companies are careful while extending credit as it may lead to bad debts for the business.

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