A donation of cash increases which kind of account on the balance sheet?

A donation of cash increases which kind of account on the balance sheet?

• A. Asset
• B. Liability
• C. Revenue
• D. Equity

Answer: (A)

Receiving cash directly increases cash on hand, and cash is an asset on the balance sheet. When you get a donation, your asset balance grows because you now own more cash. The other options don’t fit the immediate effect: liabilities would only rise if you owed something, revenue is recorded on the income statement (not as a balance sheet asset), and equity would reflect the buildup of net assets over time rather than the immediate increase in cash itself. So the correct type of account that increases is an asset.

Receiving cash directly increases cash on hand, and cash is an asset on the balance sheet. When you get a donation, your asset balance grows because you now own more cash. The other options don’t fit the immediate effect: liabilities would only rise if you owed something, revenue is recorded on the income statement (not as a balance sheet asset), and equity would reflect the buildup of net assets over time rather than the immediate increase in cash itself. So the correct type of account that increases is an asset.