An amount paid in cash to John is Dr to John and Cr to
An amount paid in cash to John is Dr to John and Cr to
Explanation
When an amount is paid in cash to John, the entry is: Debit John’s account and Credit Cash account. The question asks which account is credited.
When cash leaves the business, the cash account is credited because assets decrease with credits. If the payment was made by bank transfer instead, the bank account would be credited.
John’s account is debited because something is going to him. If John is an employee, this might be salary. If John is a creditor, this reduces what we owe him. If John is an owner, this could be drawings.
Bank would be credited only if payment was made by cheque or transfer. Capital is credited when the owner invests money. Debtors are credited when they pay us, not when we pay others. The answer is cash because that’s what’s being used for payment.