Question

In transaction (A) on 5/8, the Cash account is an

A.asset account, which increases
B. Expense account, which decreases.
C. Expense account, which increases
D. Asset account, which decreases

Answer 1

Cash is an assets account. According to the rules of journal entries, an assets account is debited when it increases and it is credited when it decreases.

In the given transaction (A) on 5/8, the company has paid telephone bill of $154.32 with cash. It means the cash of $154.32 is paid and it will result in the decrease in cash by $154.32. Cash is an asset account. Hence we can say that this transaction will result in the decrease in cash by $154.32.

Hence the correct answer is:

D. Asset account, which decreases