Let's break down the difference between recording credit sales and credit purchases. Recording Credit Sales: When a business makes a credit sale, it means goods or services are provided to a customer, but payment is not received immediately. The customer promises to pay at a later date. The business records an increase in an asset* account called Accounts Receivable (or Debtors), as the customer now owes money to the business. Simultaneously, the business records an increase in its revenue* account, Sales Revenue, because the sale has occurred. Effect:* Increases assets (Accounts Receivable) and increases revenue (Sales Revenue). Recording Credit Purchases: When a business makes a credit purchase, it means the business receives goods or services from a supplier, but the business will pay the supplier at a later date. The business records an increase in an expense account, typically Purchases (if using a periodic inventory system) or an asset* account, Inventory (if using a perpetual inventory system), because the goods have been acquired. Simultaneously, the business records an increase in a liability* account called Accounts Payable (or Creditors), as the business now owes money to the supplier. Effect:* Increases expenses/assets (Purchases/Inventory) and increases liabilities (Accounts Payable). In essence, a credit sale creates an asset (money owed to the business), while a credit purchase creates a liability (money owed by the business). That's 2 down. 3 left today — send the next one.