When recording a cash sale of $8,000, which entry correctly increases cash?

When recording a cash sale of $8,000, which entry correctly increases cash?

• A. Debit cash $8,000
• B. Credit cash $8,000
• C. Debit sales $8,000
• D. Credit sales $8,000

Answer: (A)

When recording a cash sale, you increase the cash asset, and in double-entry accounting increases to assets are recorded with a debit. So the cash received is debited for 8,000. At the same time you recognize the revenue from the sale, which is credited to the Sales (revenue) account for 8,000. The resulting journal entry is Debit Cash 8,000; Credit Sales 8,000. Crediting cash would decrease cash, which is the opposite of what happens in a cash sale. Debiting the Sales account would reduce revenue rather than record the sale, and a sale on account would affect Accounts Receivable instead of cash.

When recording a cash sale, you increase the cash asset, and in double-entry accounting increases to assets are recorded with a debit. So the cash received is debited for 8,000. At the same time you recognize the revenue from the sale, which is credited to the Sales (revenue) account for 8,000. The resulting journal entry is Debit Cash 8,000; Credit Sales 8,000.

Crediting cash would decrease cash, which is the opposite of what happens in a cash sale. Debiting the Sales account would reduce revenue rather than record the sale, and a sale on account would affect Accounts Receivable instead of cash.