Question

Sales revenue received in cash is entered by:________ a. debiting Cash and crediting Sales Revenue. b. debiting Cash and crediting Accounts Payable. c. debiting Sales Revenue and crediting Cash. d. debiting Accounts Payable and crediting Cash.

Answer 1

Answer:

a. debiting Cash and crediting Sales Revenue.

Explanation:

Double entry system of accounting requires posting of two legs for every transaction. That is the debit and credit legs.

Asset and expense accounts increase by debitting their balance while revenue accounts increase through credit.

When sales revenue is received as cash there is an increase in cash (an asset) and an increase in sales revenue too (a revenue account).

So we will debit cash to indicate an increase and credit sales revenue to indicate an increase in revenue