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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

When a customer makes a payment on their outstanding account, which journal entry correctly records the transaction?

Debit Cash; Credit Sales Revenue

Debit Cash; Credit Accounts Receivable

Debit Sales Revenue; Credit Cash

Debit Accounts Receivable; Credit Cash

Previous problemNext problem

Verified step by step guidance

Understand the nature of the transaction: A customer is making a payment on their outstanding account, which means they are settling a previously recorded Accounts Receivable balance.

Identify the accounts involved: The payment increases the company's Cash account (an asset) and decreases the Accounts Receivable account (another asset). Sales Revenue is not involved because the revenue was already recognized when the sale occurred.

Determine the correct journal entry: To record the increase in Cash, you need to debit the Cash account. To record the decrease in Accounts Receivable, you need to credit the Accounts Receivable account.

Review the options provided: The correct journal entry is 'Debit Cash; Credit Accounts Receivable,' as it reflects the increase in Cash and the decrease in Accounts Receivable.

Ensure the journal entry aligns with the accounting equation: Assets = Liabilities + Equity. This transaction affects only the asset side, with one asset (Cash) increasing and another asset (Accounts Receivable) decreasing by the same amount, keeping the equation balanced.