Question

The ABC Company recognizes credit sales of €100,000. The cost of the goods sold is €60,000. Answer the following two questions:
What is the effect of the transaction described above on the profit and loss account?

A. The profit and loss account increases by €100,000.
B. The profit and loss account increases by €40,000.
C. The profit and loss account does not change.
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Answer 1

Answer:

The answer will be option b) the profit and loss account increases by €40,000

Explanation:

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Answer 2

Answer:

Explanation:

Sales credit journal entry is vital for companies that sell their goods on credit to their customers. At the time of sales on credit, accounts the receivable account will be debited which will be shown in the balance sheet of the company as an asset unless the amount is received against such sales and the sales account will be credited which will be shown as revenue in the income statement of the company.

Credit sales doesn't show in Profit and loss Account.

The profit and loss account does not change.