Future Business Leaders of America (FBLA) Accounting Practice Test

What is the purpose of a sales journal?

1. To record all sales irrespective of payment method

2. To record only the sale of merchandise on account

3. To track cash sales only

4. To document employee commission on sales

The correct answer is: To record only the sale of merchandise on account

The sales journal serves the specific purpose of recording sales transactions made on account, which refers to sales where payment is expected to be received at a later date. This means that the sales journal is used primarily to capture credit sales, which typically involve accounts receivable. When a business sells merchandise to a customer on account, it recognizes revenue at the point of sale, even if the payment will come later. Recording these transactions in the sales journal helps businesses keep an organized account of all outstanding receivables, which is crucial for managing cash flow and assessing financial health. While other types of sales or transactions may occur, such as cash sales or sales that do not require an account to be established, these transactions are recorded in different journals (like a cash receipts journal or a general journal). This differentiation helps maintain clear and accurate records, ensuring that financial statements can accurately reflect the business’s performance. Thus, focusing on credit sales allows for more effective tracking and management of accounts receivable, directly supporting the financial operations of the business.