A cash sale

When a customer pays at the moment of sale, cash goes up and revenue goes up: Dr Cash, Cr Sales revenue.

Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.

What it is for

The till is counted at the end of the day and there is 1,840 more in it than this morning. That one number is two accounts: the cash you can now see, and the sales that put it there.

How to think about it

Cash is an asset getting bigger, so debit it. Sales is revenue getting bigger, so credit it. Same amount on each line.

Worked example

Dr Cash 1,840

An asset going up: debit.

    Cr Sales revenue 1,840

Revenue going up: credit.

Debits 1,840 = credits 1,840

The check, every time.

Your turn

A customer pays 620 cash for goods. Write the credit line.

Dr Cash 620 / Cr  620

The trap

Crediting cash because the bank statement says credit. The statement is the bank's books, where your money is their debt. In your books, cash coming in is a debit.

Practise a cash sale on HoneA question on it now, a coding challenge where there is one, and it is remembered for review. Free, no email needed.