Which one of the following is the correct journal entry for $640 cash for advertising?

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BlackTom AI · Accepted Answer

Question restated: Which one of the following is the correct journal entry for $640 cash for advertising?

Option 1 shows: Debit Advertising Expense $640, Credit Cash $640 (Paid for advertising). This is the correct double-entry: advertising expense increases (debit) while cash decreases (credit) for a cash payment related to advertising.

Option 2 shows: Debit Advertising expense, Credit Advertising expense $640, Cash $640, (Paid for advertising). Here the formatting is muddled, and it attempts to debit and credit the same account (Advertising expense), which would not properly reflect the transaction. It fails to show cash being credited and thus is incorrect.

Option 3 shows: Debit Salary Expense $640, Credit Cash $640 (Paid for advertising). This misclassifies the expense as salary expense rather than advertising expense, which would be inaccurate for the nature of the expense and could distort financial statements.

Option 4 shows: Debit Cash $640, Credit Revenue $640 (Paid for advertising). This reverses the typical flow: cash is received or recorded as an asset, and revenue is credited for income, which has nothing to do with paying for advertising. It misstates both accounts and the purpose of the payment.

Detailed review of why each incorrect option fails: Option 2’s formatting fails to clearly separate accounts and would not provide a valid T-account record; it also misleads by not properly crediting Cash. Option 3 swaps the expense type from Advertising Expense to Salary Expense, which would misclassify the expense category. Option 4 implies a revenue impact from an advertising payment, which is inappropriate since paying for advertising is an expense subtracting from cash, not generating revenue.

Putting it together, the standard journal entry for paying $640 in cash for advertising is to debit Advertising Expense for $640 to reflect the cost, and to credit Cash for $640 to reflect the cash outflow. In other words, the correct choice aligns with the fundamental equation: expenses increase with debits, and cash decreases with credits for a cash payment related to an expense.

Note: If you’re practicing journal entries, ensure the accounts affected match the nature of the transaction (expense increases on the debit side; cash decreases on the credit side) and that the amount is the same on both sides to keep the books balanced.

4510_ACCTING_1002 Module 3.3

Which one of the following is the correct journal entry for $640 cash for advertising?

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