LO 5.1 If a journal entry includes a debit or credit to the Cash account, it is most likely which of the following?Choose one answer from the options below.A. a closing entryB. an adjusting entryC. an ordinary transaction entryD. outside of the accounting cycle
Question
LO 5.1 If a journal entry includes a debit or credit to the Cash account, it is most likely which of the following?Choose one answer from the options below.A. a closing entryB. an adjusting entryC. an ordinary transaction entryD. outside of the accounting cycle
Solution
The correct answer is C. an ordinary transaction entry. This is because cash is involved in many day-to-day business transactions, such as receiving cash from customers or paying cash to suppliers. These transactions are recorded as they occur throughout the accounting period, making them ordinary transaction entries. Adjusting entries are made at the end of an accounting period to bring all accounts up to date on an accrual accounting basis, and closing entries are made at the end of an accounting period to prepare temporary accounts for the next period. These entries do not typically involve cash. Therefore, if a journal entry includes a debit or credit to the Cash account, it is most likely an ordinary transaction entry.
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