Which of the following transactions would require a debit to the Cash account?

• A. Receiving payment from a customer for a previous sale
• B. Declaring a dividend to shareholders
• C. Purchasing equipment on credit
• D. Paying rent for the month

Answer: (A)

Verified step by step guidance

1. Understand the nature of the Cash account: The Cash account is an asset account that increases with a debit entry and decreases with a credit entry. Transactions that involve receiving cash will require a debit to the Cash account.
2. Analyze the first option: 'Receiving payment from a customer for a previous sale.' This transaction involves receiving cash from a customer, which increases the Cash account. Therefore, it would require a debit to the Cash account.
3. Analyze the second option: 'Declaring a dividend to shareholders.' Declaring a dividend does not involve cash being received or paid immediately. Instead, it creates a liability (Dividends Payable) and does not affect the Cash account directly at this stage.
4. Analyze the third option: 'Purchasing equipment on credit.' Purchasing equipment on credit does not involve cash being paid immediately. Instead, it creates a liability (Accounts Payable) and does not affect the Cash account directly.
5. Analyze the fourth option: 'Paying rent for the month.' Paying rent involves cash being paid out, which decreases the Cash account. This transaction would require a credit to the Cash account, not a debit.