In double entry accounting, credit sales to customers are initially recorded as which of the following?

Introduction / Context:
When a business sells goods or services on credit, it recognises revenue even though no cash has been received yet. The correct treatment of such credit sales is a basic topic in accounting and is frequently tested in exams. This question checks whether you know which account is debited when recording a credit sale and how that relates to Accounts Receivable.

Given Data / Assumptions:

• The business sells goods or services on credit, meaning payment will be received later.
• Revenue is recognised at the time of sale under accrual accounting.
• The customer now owes the business a certain amount of money.
• Accounts Receivable records amounts due from customers; Accounts Payable records amounts due to suppliers.

Concept / Approach:
Under accrual accounting, when a credit sale is made, the business records a debit to Accounts Receivable (an asset) and a credit to Sales revenue (income). This entry reflects the fact that the company has earned revenue and has a legal claim to receive cash from the customer in the future. Accounts Payable is used when the business owes money to suppliers, not when customers owe money to the business. Credit sales are therefore recorded as Accounts Receivable, not as Payables or unrecorded transactions.

Step-by-Step Solution:
Step 1: Recognise that a credit sale increases revenue and creates a receivable from the customer. Step 2: Recall the standard journal entry: Debit Accounts Receivable; Credit Sales revenue. Step 3: Understand that this debit entry places the customer's amount due in the Accounts Receivable ledger. Step 4: Distinguish this from Accounts Payable, which represents obligations to suppliers, not customer debts. Step 5: Conclude that credit sales are recorded as Accounts Receivable, because the customer owes money to the business.

Verification / Alternative check:
Take a simple example: a company sells goods worth Rs 50,000 on credit. The entry is: Debit Accounts Receivable 50,000 Credit Sales 50,000 When the customer pays later, the company debits Cash or Bank and credits Accounts Receivable. At no point is Accounts Payable involved in recording the sale itself. This confirms that the correct account for the initial recording is Accounts Receivable.

Why Other Options Are Wrong:
Accounts Payable is used to record amounts the business owes to its suppliers or creditors, not amounts owed by customers. Recording the sale in both Receivable and Payable would double count and distort the financial statements. The claim that credit sales are not recorded until cash is received contradicts the accrual principle; if that were done, revenue and receivables would be understated and financial reports would be misleading.

Common Pitfalls:
Students sometimes confuse credit in everyday language (buying on credit) with credit in the accounting sense (a type of entry). They may believe that credit sales must be recorded on the credit side of the customer's account and therefore misidentify the related general ledger account. Always remember that from the business's perspective, a credit sale creates an asset called Accounts Receivable, which is increased with a debit entry.

Final Answer:
Credit sales are recorded as Accounts Receivable, because the customer owes money to the business.