How do you record cash received from a debtor in the cash book?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

How do you record cash received from a debtor in the cash book?

Explanation:
When a debtor pays you, you are increasing your cash and decreasing the amount they owe. In double-entry bookkeeping, increases to assets are recorded on the debit side, and reductions in receivables are recorded on the credit side. The cash book records cash movements, so receiving cash is entered as a debit to Cash/Bank and a credit to Trade Debtors. For example, a £150 payment would be Dr Cash/Bank £150; Cr Trade Debtors £150. The other options would either reduce cash or increase the debtor’s balance, which doesn’t reflect the receipt of cash.

When a debtor pays you, you are increasing your cash and decreasing the amount they owe. In double-entry bookkeeping, increases to assets are recorded on the debit side, and reductions in receivables are recorded on the credit side. The cash book records cash movements, so receiving cash is entered as a debit to Cash/Bank and a credit to Trade Debtors. For example, a £150 payment would be Dr Cash/Bank £150; Cr Trade Debtors £150. The other options would either reduce cash or increase the debtor’s balance, which doesn’t reflect the receipt of cash.

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