Which transaction increases trade receivables?

Which transaction increases trade receivables?

• A. Cash sale
• B. Credit sale
• C. Salary payment
• D. Rent invoice

Answer: (B)

Trade receivables are amounts a business expects to collect from customers when sales are made on credit. When you make a credit sale, you record a receivable because the customer now owes you money, so trade receivables increase. In contrast, a cash sale brings in cash immediately, so there is no balance owed to you after the sale. A salary payment is an expense paid to employees and reduces cash, not money owed to customers. A rent invoice creates a liability to pay the landlord and does not involve money owed by customers, so it does not increase trade receivables.

Trade receivables are amounts a business expects to collect from customers when sales are made on credit. When you make a credit sale, you record a receivable because the customer now owes you money, so trade receivables increase. In contrast, a cash sale brings in cash immediately, so there is no balance owed to you after the sale. A salary payment is an expense paid to employees and reduces cash, not money owed to customers. A rent invoice creates a liability to pay the landlord and does not involve money owed by customers, so it does not increase trade receivables.