Which statement correctly describes the effect of a cash sale on accounts?

Which statement correctly describes the effect of a cash sale on accounts?

• A. Cash increases and Sales increases
• B. Cash decreases and Sales increases
• C. Cash increases and Inventory increases
• D. Cash increases and Purchases decrease

Answer: (A)

When a cash sale happens, you receive cash and you recognize revenue from the sale. Cash is an asset that increases when money comes in, and Sales is a revenue account that increases when income is earned. In double-entry terms, you would debit Cash and credit Sales. That alignment means the statement stating that Cash increases and Sales increases is correct. In a full journal entry you’d also touch Inventory and Cost of Goods Sold to reflect the sold goods, but among the given accounts, cash and sales are the ones that rise.

When a cash sale happens, you receive cash and you recognize revenue from the sale. Cash is an asset that increases when money comes in, and Sales is a revenue account that increases when income is earned. In double-entry terms, you would debit Cash and credit Sales. That alignment means the statement stating that Cash increases and Sales increases is correct. In a full journal entry you’d also touch Inventory and Cost of Goods Sold to reflect the sold goods, but among the given accounts, cash and sales are the ones that rise.