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In financial accounting, all of the following accounts have normal debit balances except:
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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
Have no effect on Cash because Cash is not a normal-balance account
C
Increase a liability and increase Cash
D
Increase Cash
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Understand that the Cash account is an asset account, and asset accounts normally have a debit balance.
Recall that in accounting, debits increase asset accounts, while credits decrease asset accounts.
Recognize that a credit to the Cash account means you are reducing the amount of cash on hand or in the bank.
Therefore, a credit entry to Cash will decrease the Cash account balance.
Summarize that the correct effect of a credit to Cash is to decrease the Cash account balance.
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