Marisol won a cash prize of $1,500. What is the correct recording entry?

Marisol won a cash prize of $1,500. What is the correct recording entry?

• A. Credit to the Cash account
• B. Debit to the Revenue account
• C. Debit to the Cash account
• D. Credit to the Accounts Receivable account

Answer: (C)

When you receive cash, you’re increasing an asset. Cash is an asset, and assets are increased with a debit. So receiving $1,500 is recorded as a debit to the Cash account for 1,500. The other side of the entry would be a credit to a revenue or other income account to reflect the prize as income, but the key idea shown here is that cash increases with a debit. Why the other options don’t fit: debiting revenue would decrease revenue (revenue typically increases with credits), crediting cash would reduce cash (the opposite of what happens when you receive cash), and debiting accounts receivable would imply you expect future collection rather than actual cash received.

When you receive cash, you’re increasing an asset. Cash is an asset, and assets are increased with a debit. So receiving $1,500 is recorded as a debit to the Cash account for 1,500. The other side of the entry would be a credit to a revenue or other income account to reflect the prize as income, but the key idea shown here is that cash increases with a debit.

Why the other options don’t fit: debiting revenue would decrease revenue (revenue typically increases with credits), crediting cash would reduce cash (the opposite of what happens when you receive cash), and debiting accounts receivable would imply you expect future collection rather than actual cash received.