What does it mean if a firm records a sales transaction as follows? Debit - Accounts Receivable $5,000 Credit - Sales $5,000 Debit - Cost of Goods Sold $5,000 Credit - Merchandise Inventory $5,000 The firm has done improper accounting because there should only ever be one debit and one credit.. The firm is probably a non-profit because it is only breaking even on this transaction. The firm has probably simply recorded a typical entry to record the sale and remove the item from inventory Either the accountant did the entry wrong or the company is run by idiots because if a company only breaks even on merchandise sales, it will lose money when it tries to pay workers, the light bill, etc