Topics, 100 Accounting Resources, 100 Lecture List
PREVIOUS NEXT
Cash received on account transaction recorded in the format of the accounting equation. Cash received on account means cash was received for work that has been done in the past resulting in cash increasing but sales or revenue does not increase at this point in time even though we received cash because we already recorded the revenue when we did the work in account receivable according to the revenue recognition principle. Accounts receivable is an assets account. This entry reduced one asset, account receivable, and increases another asset, cash. There is not net effect on the accounting equation. The fact that there is no effect in the accounting equation but this is a result of assets going up and down. There are still to account impacted by this transaction.