When a company purchases a logo for cash, which account is debited in the journal entry?

• A. Accounts Payable
• B. Revenue
• C. Cash
• D. Intangible Assets

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the nature of the transaction. The company is purchasing a logo, which is considered an intangible asset because it does not have physical substance but provides future economic benefits.
2. Step 2: Identify the accounts involved in the transaction. Since the logo is purchased for cash, the accounts affected are 'Intangible Assets' and 'Cash'.
3. Step 3: Determine the type of account for 'Intangible Assets' and 'Cash'. 'Intangible Assets' is an asset account, and 'Cash' is also an asset account.
4. Step 4: Apply the rules of debit and credit. When an asset is acquired, the asset account (Intangible Assets) is debited to increase its balance. The 'Cash' account is credited to decrease its balance because cash is being used to pay for the logo.
5. Step 5: Record the journal entry. Debit 'Intangible Assets' for the cost of the logo and credit 'Cash' for the same amount to reflect the payment made.