Multiple Choice
In journal entries, a debit to Salaries Expense will:
1
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2. Transaction Analysis
Journal Entries: Debits and Credits
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In journal entries, a credit to Cash will generally have what effect on the Cash account balance?
A
Decrease cash
B
Increase cash
C
Have no effect on cash because Cash is an income statement account
D
Increase liabilities
Verified step by step guidance1
Understand the nature of the Cash account: Cash is an asset account, and asset accounts normally have a debit balance.
Recall the rules of debits and credits for asset accounts: Debits increase asset accounts, while credits decrease asset accounts.
Analyze the effect of a credit to Cash: Since Cash is an asset, a credit entry will reduce its balance.
Eliminate incorrect options: Cash is not an income statement account, so it cannot have no effect; also, a credit to Cash does not increase liabilities directly.
Conclude that a credit to Cash will decrease the Cash account balance.
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