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

Which of the following transactions would require a debit to the Cash account?

The business declares a dividend to shareholders.

The business purchases equipment on credit.

The business receives cash from a customer for a previous credit sale.

The business pays rent in cash.

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Verified step by step guidance

Step 1: Understand the concept of debits and credits in accounting. A debit to the Cash account means an increase in cash, as Cash is an asset account. Conversely, a credit to the Cash account means a decrease in cash.

Step 2: Analyze each transaction provided in the problem to determine its impact on the Cash account. For example, if cash is received, it would result in a debit to the Cash account, whereas if cash is paid, it would result in a credit to the Cash account.

Step 3: Evaluate the first transaction: 'The business declares a dividend to shareholders.' Declaring a dividend does not involve cash immediately; it creates a liability (Dividends Payable). Therefore, this transaction does not require a debit to the Cash account.

Step 4: Evaluate the second transaction: 'The business purchases equipment on credit.' Purchasing equipment on credit does not involve cash at the time of the transaction. Instead, it creates a liability (Accounts Payable). Therefore, this transaction does not require a debit to the Cash account.

Step 5: Evaluate the third transaction: 'The business receives cash from a customer for a previous credit sale.' Receiving cash increases the Cash account, requiring a debit entry. This is the transaction that would require a debit to the Cash account.