Final answer:
A sale on account is recorded by debiting assets, with a corresponding credit to revenue to reflect the earned income.
Step-by-step explanation:
A sale on account would be recorded by debiting assets. When a sale on account occurs, the company is essentially providing goods or services to a customer who promises to pay in the future, creating an account receivable. In accordance with double-entry bookkeeping and the design of a T-account, this transaction involves two steps. The company would debit its assets (accounts receivable) because there is an increase in what is owed to the company, thus increasing its assets. Concurrently, the company would credit its revenue because it has earned income from the sale, despite not having received the payment yet. It's essential to understand that in terms of a T-account, where assets are on the left and liabilities plus net worth are on the right, each transaction must be balanced to maintain the fundamental accounting equation: assets = liabilities + net worth.