Which statement correctly describes the effect of a credit to the Cash account?

• A. A credit to the Cash account has no effect unless it is paired with a debit to Revenue.
• B. A credit to the Cash account increases total assets.
• C. A credit to the Cash account decreases the account balance.
• D. A credit to the Cash account increases the account balance.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the nature of the Cash account. Cash is an asset account, and asset accounts normally have a debit balance.
2. Step 2: Recall the rules of debits and credits for asset accounts: debits increase asset accounts, while credits decrease asset accounts.
3. Step 3: Analyze what happens when a credit is made to the Cash account. Since Cash is an asset, a credit entry will reduce its balance.
4. Step 4: Recognize that a credit to Cash does not increase total assets; it decreases the Cash balance and thus total assets unless offset by other transactions.
5. Step 5: Conclude that the correct description is that a credit to the Cash account decreases the account balance.