Last Updated on 12/29/2017 by GS Staff
Q:Is cash a debit or credit in accounting?
A:Cash is an asset. Assets have a normal balance of a debit. This means that cash will increase with a debit and decrease with a credit.
An example of a journal entry that would be created from a company receiving cash of $1,000 from a sale would be as follows. Notice that cash is a debit because it is increasing.
When a company pays out cash, the journal entry would reflect a credit for cash because cash is decreasing. For example, assume that a company buys $500 of supplies with $500 cash. The journal entry would be:
Keep in mind that a debit does not always increase an account and a credit does not always reduce an account. It depends on the normal balance of the type of account. The below table reflects the normal balances of each listed account.
|Account||Normal Balance||Increases With||Decreases With|