How does one handle cash transferred into the company account after activating credit?

When cash is transferred into a company account after activating credit, it should be added to the cash account. This is because the cash inflow represents an increase in the company's cash resources resulting from the credit arrangement.

In accounting, every transaction that affects cash must be recorded to show an accurate depiction of the company's financial position. When cash is received, whether through sales revenue, loans, or other transactions, it reflects a positive change in assets. Adding this amount to the cash account ensures that the balance remains accurate and reflects all available funds the company has.

Properly recording this cash transfer accurately reflects the company's liquidity, supports financial reporting, and ensures that subsequent decisions are made based on complete and credible data.