A business makes a cash sale to a customer for £1000 which two accounts are affected?

A business makes a cash sale to a customer for £1000 which two accounts are affected?

• A. Cash will increase by £1000 and Sales will increase by £1000
• B. Cash will decrease by £1000 and Sales will increase by £1000
• C. Cash will increase by £1000 and Purchases will increase by £1000
• D. Cash will increase by £1000 and Inventory will decrease by £1000

Answer: (A)

When you make a cash sale, you receive money and you also record income from the sale. This means the cash asset increases and the revenue (sales) increases as well. In double-entry terms you would Debit Cash £1000 and Credit Sales £1000. The other options don’t fit because a sale does not involve Purchases, and in this simple view the act of selling does not automatically change Inventory—the inventory change would be handled in a separate entry to reflect cost of goods sold. So the two accounts affected by the sale itself are Cash and Sales.

When you make a cash sale, you receive money and you also record income from the sale. This means the cash asset increases and the revenue (sales) increases as well. In double-entry terms you would Debit Cash £1000 and Credit Sales £1000. The other options don’t fit because a sale does not involve Purchases, and in this simple view the act of selling does not automatically change Inventory—the inventory change would be handled in a separate entry to reflect cost of goods sold. So the two accounts affected by the sale itself are Cash and Sales.