What is the impact on cash when a payment is recorded in the cash payments journal?

What is the impact on cash when a payment is recorded in the cash payments journal?

• A. Increased
• B. Decreased
• C. Unchanged
• D. Settled

Answer: (B)

When a payment is recorded in the cash payments journal, it signifies that cash has been disbursed by the organization. This entry reflects an outflow of cash, which directly decreases the cash balance of the entity. In accounting, every transaction that involves cash must be properly recorded to maintain accurate financial statements. Therefore, when a payment is documented in the cash payments journal, the effect is a reduction in the cash on hand or in bank accounts, reflecting the actual financial position of the organization following the transaction. Each time cash is spent, either for expenses, supplier payments, or any other liabilities, it leads to a decrease in the cash available for future transactions.

When a payment is recorded in the cash payments journal, it signifies that cash has been disbursed by the organization. This entry reflects an outflow of cash, which directly decreases the cash balance of the entity. In accounting, every transaction that involves cash must be properly recorded to maintain accurate financial statements. Therefore, when a payment is documented in the cash payments journal, the effect is a reduction in the cash on hand or in bank accounts, reflecting the actual financial position of the organization following the transaction. Each time cash is spent, either for expenses, supplier payments, or any other liabilities, it leads to a decrease in the cash available for future transactions.