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 is recorded with a debit to Notes Receivable and a credit to Cash?

A company loans cash to a customer and receives a promissory note.

A company collects cash from a customer on account.

A company issues common stock for cash.

A company pays off a note payable to the bank.

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Verified step by step guidance

Understand the nature of the transaction: A debit to Notes Receivable indicates that the company is increasing its asset account for notes it expects to collect in the future. A credit to Cash indicates that the company is decreasing its cash asset account.

Analyze the first option: 'A company loans cash to a customer and receives a promissory note.' In this case, the company is giving cash (credit to Cash) and receiving a promissory note (debit to Notes Receivable). This matches the transaction described.

Analyze the second option: 'A company collects cash from a customer on account.' Here, the company would debit Cash (increase in cash) and credit Accounts Receivable (decrease in the amount owed by the customer). This does not involve Notes Receivable.

Analyze the third option: 'A company issues common stock for cash.' In this case, the company would debit Cash (increase in cash) and credit Common Stock (increase in equity). This does not involve Notes Receivable.

Analyze the fourth option: 'A company pays off a note payable to the bank.' Here, the company would debit Notes Payable (decrease in liability) and credit Cash (decrease in cash). This does not involve Notes Receivable.