What accounts are affected when credit increases in relation to customer payments?

When credit increases in relation to customer payments, the Accounts Receivable and Sales Income accounts are directly affected. This is because, when a company recognizes a sale on credit, it increases the Accounts Receivable, indicating that a customer owes money for the goods or services provided. Concurrently, the Sales Income account is also increased, reflecting the revenue earned from the sale. This dual effect is fundamental in accounting, as it adheres to the double-entry bookkeeping system, where every transaction affects at least two accounts.

The other options do not accurately describe the relationship between credit increases and customer payment processing. For example, while inventory and COGS may relate to sales transactions, they do not specifically account for the increase in credit transactions. Similarly, Undeposited Funds and Customer Deposits or Sales Income and Cash pertain to different aspects of cash flow and customer payments rather than directly reflecting an increase in credit related to customer payments. Thus, the link between Accounts Receivable and Sales Income is the core reason why this answer is the most appropriate.