If posting to the general ledger with a cash book that is a book of prime entry and isn't part of a double-entry system, what will be credited?

If posting to the general ledger with a cash book that is a book of prime entry and isn't part of a double-entry system, what will be credited?

• A. Bank
• B. Revenue
• C. Expenses
• D. Purchases

Answer: (A)

When a cash book is used as a book of prime entry and isn’t part of a double-entry system, posting to the general ledger records only the effect of cash movements on the cash/bank balance. A cash payment reduces the bank balance, so the bank account is shown on the credit side of the ledger posting. The accompanying debit would go to the relevant expense or purchases account to reflect what was paid for. So, the credit entry is Bank because cash leaving the business lowers the bank balance. If you were recording a cash receipt, Bank would be debited instead.

When a cash book is used as a book of prime entry and isn’t part of a double-entry system, posting to the general ledger records only the effect of cash movements on the cash/bank balance. A cash payment reduces the bank balance, so the bank account is shown on the credit side of the ledger posting. The accompanying debit would go to the relevant expense or purchases account to reflect what was paid for.

So, the credit entry is Bank because cash leaving the business lowers the bank balance. If you were recording a cash receipt, Bank would be debited instead.