What effects does this journal entry have on the accounts?
A) Increase Cash and increase Land
B) Increase Land and decrease Cash
C) Decrease Cash and decrease Land
D) Increase Cash and decrease Land

Question

What effects does this journal entry have on the accounts?
A) Increase Cash and increase Land 
B) Increase Land and decrease Cash 
C) Decrease Cash and decrease Land 
D) Increase Cash and decrease Land

Quizplus · Accepted Answer

This journal entry implies that the business purchased land, which would increase the Land account. However, in order to purchase the land, cash would need to be paid out, resulting in a decrease in the Cash account. Therefore, the correct choice is B: Increase Land and decrease Cash.

What Effects Does This Journal Entry Have on the Accounts