When a service is performed and payment is received immediately, which accounting entry is used?

When a service is performed and payment is received immediately, which accounting entry is used?

• A. An Invoice
• B. A Bank Deposit
• C. A Credit Memo
• D. Sales Receipt

Answer: (D)

Recording cash sales requires a Sales Receipt. When a service is performed and payment is received right away, you’re capturing both the income and the cash at the same moment. A Sales Receipt serves as the document that records this immediate cash inflow and the revenue earned. In double-entry terms, you would debit Cash (increasing assets) and credit Sales Revenue (increasing income), and you may also record any applicable sales tax. An Invoice, by contrast, is used when you bill the customer and expect payment later, creating Accounts Receivable. A Credit Memo is issued to acknowledge a reduction in what the customer owes (refunds or allowances). A Bank Deposit simply records depositing cash into the bank and doesn’t by itself document the sale.

Recording cash sales requires a Sales Receipt. When a service is performed and payment is received right away, you’re capturing both the income and the cash at the same moment. A Sales Receipt serves as the document that records this immediate cash inflow and the revenue earned. In double-entry terms, you would debit Cash (increasing assets) and credit Sales Revenue (increasing income), and you may also record any applicable sales tax.

An Invoice, by contrast, is used when you bill the customer and expect payment later, creating Accounts Receivable. A Credit Memo is issued to acknowledge a reduction in what the customer owes (refunds or allowances). A Bank Deposit simply records depositing cash into the bank and doesn’t by itself document the sale.