Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

In the context of journal entries, which of the following best describes the effect of a debit entry?

It decreases assets and increases revenues.

It increases assets and decreases liabilities.

It increases liabilities and decreases expenses.

It increases both revenues and owner's equity.

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Verified step by step guidance

Understand the concept of a debit entry: In accounting, a debit entry is used to record increases in asset accounts and expense accounts, and decreases in liability accounts, equity accounts, and revenue accounts.

Analyze the options provided: Each option describes the effect of a debit entry on different types of accounts. You need to determine which description aligns with the fundamental rules of debits and credits.

Recall the accounting equation: Assets = Liabilities + Owner's Equity. A debit entry typically increases assets or expenses and decreases liabilities, equity, or revenues.

Match the correct description: Based on the rules of debits and credits, identify the option that states 'It increases assets and decreases liabilities,' as this aligns with the effect of a debit entry.

Confirm your understanding: Review the rules of debits and credits to ensure the selected option is consistent with the principles of financial accounting.