A sale to a guest using a credit card is recorded to Accounts Receivable

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BlackTom AI · Accepted Answer

Consider the statement: 'A sale to a guest using a credit card is recorded to Accounts Receivable.'
Option 1: True. In many accounting systems, a sale made via credit card creates a receivable from the card issuer (or from the customer until settlement), so the entry at the time of sale can be Debit Accounts Receivable (or Card Receivable) and Credit Sales. This reflects that cash will arrive later from the card company after processing, and the business has a claim (receivable) to receive funds.
Option 2: False. If you interpret 'Accounts Receivable' strictly as money owed by customers due to sale on credit to that customer, a card sale could be recorded differently in some setups. Some systems might immediately recognize cash from the credit card processor (less fees) or record a specific 'Card Receivable' rather than generic Accounts Receivable, depending on chart of accounts and processing flow. Therefore, labeling the statement as universally false would ignore common practice where the card issuer is treated as the counterparty to the receivable until settlement, but it would be inaccurate if one adheres strictly to a wording where 'Accounts Receivable' is not used for card transactions.
Overall, the correctness hinges on the accounting policy in use: many courses teach that a credit card sale creates a receivable (often named Card Receivable) before settlement, which aligns with recording to a form of receivable, including Accounts Receivable in some systems. If the policy specifies Card Receivable rather than Accounts Receivable, a student might consider the statement partially correct or context-dependent, but the typical practice supports recognizing a receivable related to the card sale until settlement, making the statement reasonably true in standard frameworks.
In short, the underlying idea is that a card sale generates a receivable arising from the credit card processor, and whether that is labeled Accounts Receivable or Card Receivable depends on the chart of accounts used; the concept of a receivable tied to the card transaction is the key. Different instructional materials may phrase it slightly differently, but the core concept remains that a receivable exists until funds are settled.

251_1HO004_Accounting I

A sale to a guest using a credit card is recorded to Accounts Receivable

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