During a revenue transaction under double-entry accounting, which of the following describes the effect on accounts and which accounts increase?

• A. Debit Cash or Accounts Receivable and Credit Revenue; Revenue increases equity and assets.
• B. Debit Revenue and Credit Cash or Accounts Receivable; Net income increases equity.
• C. Debit Expenses; Credit Revenue; Net income decreases equity.
• D. Debit Cash; Debit Revenue; Credit Liabilities.

Answer: (A)

In double-entry accounting, earning revenue increases both assets (when cash is received or a receivable is created) and equity (through higher net income). The correct entry changes an asset account on the debit side and revenue on the credit side. So you debit Cash or Accounts Receivable (assets rise with a debit) and you credit Revenue (revenue is a credit account, so its increase is a credit). This shows the asset increase and the equity increase from the earned income.

Why the other ideas don’t fit: revenue is increased with a credit, not a debit, so debiting revenue would reduce it. Debiting expenses and crediting revenue would reflect recognizing costs tied to revenue, not the revenue itself. Debiting Cash and Revenue while crediting Liabilities misstates the relationship—revenue should be recorded with a debit to the asset involved and a credit to Revenue, not a debit to Revenue or a credit to Liabilities.