Example 2: Collection of Sales on Account
When a firm sells goods on account, it will have a two-way effect:
1. Increase in accounts receivable: The firm is owed money by the customer, hence the Accounts Receivable account will increase. This is recorded as a debit.
2. Increase in revenue: The business earns revenue from the sale, so the revenue is increased. Thus, it is recorded as a credit. Therefore, Account Receivable Debit and Revenue Credit Again, debit equal credit. Balances the accounting books. Accounting Equation

Example 2: Collection of Sales on Account
When a firm sells goods on account, it will have a two-way effect:
1. Increase in accounts receivable: The firm is owed money by the customer, hence the Accounts Receivable account will increase. This is recorded as a debit.
2. Increase in revenue: The business earns revenue from the sale, so the revenue is increased. Thus, it is recorded as a credit. Therefore, Account Receivable Debit and Revenue Credit Again, debit equal credit. Balances the accounting books. Accounting Equation

Example 2: Collection of Sales on Account
When a firm sells goods on account, it will have a two-way effect:
1. Increase in accounts receivable: The firm is owed money by the customer, hence the Accounts Receivable account will increase. This is recorded as a debit.
2. Increase in revenue: The business earns revenue from the sale, so the revenue is increased. Thus, it is recorded as a credit. Therefore, Account Receivable Debit and Revenue Credit Again, debit equal credit. Balances the accounting books. Accounting Equation