In recording a cash prize, which account is debited?

In recording a cash prize, which account is debited?

• A. Cash
• B. Sales Revenue
• C. Tax Payable
• D. Accounts Receivable

Answer: (A)

In double-entry bookkeeping, increases in assets are recorded as debits. Receiving a cash prize adds to your cash, so you debit the Cash account. The credit would go to the appropriate income or prize-revenue account, but the question focuses on which account is debited, and Cash is the one that increases with the prize. Other options don’t fit because they represent different types of accounts: Sales Revenue is an income account that would be credited when revenue is earned, not debited on receipt of cash; Tax Payable is a liability and would be affected by taxes, not by receiving prize money; Accounts Receivable would only increase if you had a receivable, which isn’t the case when cash is actually received.

In double-entry bookkeeping, increases in assets are recorded as debits. Receiving a cash prize adds to your cash, so you debit the Cash account. The credit would go to the appropriate income or prize-revenue account, but the question focuses on which account is debited, and Cash is the one that increases with the prize.

Other options don’t fit because they represent different types of accounts: Sales Revenue is an income account that would be credited when revenue is earned, not debited on receipt of cash; Tax Payable is a liability and would be affected by taxes, not by receiving prize money; Accounts Receivable would only increase if you had a receivable, which isn’t the case when cash is actually received.