If cash is received in a transaction, what is the typical journal entry?

• A. Credit Cash and Debit another account
• B. Debit Cash and Credit another account
• C. Debit Cash only
• D. Credit Cash only

Answer: (B)

When cash is received, you are increasing an asset. In double-entry accounting, assets are increased with a debit, and the offsetting credit goes to the account that explains where that cash came from (such as Revenue when selling goods, or Accounts Receivable when cash is collected on a consumer’s bill). So the typical entry is to Debit Cash and Credit the other account involved. This reflects the inflow of cash and the corresponding increase in the source account. Creditting Cash would imply cash is leaving, which isn’t the case here, and a one-sided entry isn’t allowed in double-entry bookkeeping.