Accounting information is usually reported on a monthly, quarterly, and annual basis. Most transactions are recorded based on a period, such as a calendar month. During a standard month, a company engages in business transactions that warrant accounting classification and recording. Listed below are some examples of business transactions and the related journal entries that are created.

Journal Entry #1: Sales Order Processed

The Demo Association sells 4 T-shirts at $25 each on May 1st to the Sacramento Piping Company on account, based on a purchase order received.

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In this journal entry, the sale of the t-shirts is recorded as a credit to the Product Revenue account, as this sale results in increased revenue for the T-shirt product. However, the purchase was made using a Purchase Order, so the Accounts Receivable account is debited for the amount of the sale.

Journal Entry #2: Cash Receipt Processed

The Demo Association receives a payment from Sacramento Piping on May 15th for the shirts.

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