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

Which of the following statements describes a common error in recording journal entries related to debits and credits?

Recording a debit to an expense account when it should be credited.

Debiting an asset account to increase its balance.

Crediting a revenue account to increase its balance.

Debiting a liability account to decrease its balance.

Previous problemNext problem

Verified step by step guidance

Understand the basic rules of debits and credits: Debits increase asset and expense accounts, while credits decrease them. Conversely, credits increase liability, equity, and revenue accounts, while debits decrease them.

Analyze the first option: 'Recording a debit to an expense account when it should be credited.' This would be incorrect because expense accounts are typically increased with debits, not credits. If an expense account is credited, it would decrease its balance, which might not align with the intended transaction.

Analyze the second option: 'Debiting an asset account to increase its balance.' This is correct because asset accounts are increased with debits. Therefore, this is not an error.

Analyze the third option: 'Crediting a revenue account to increase its balance.' This is correct because revenue accounts are increased with credits. Therefore, this is not an error.

Analyze the fourth option: 'Debiting a liability account to decrease its balance.' This is correct because liability accounts are decreased with debits. Therefore, this is not an error. The common error described in the problem is the first option, as it violates the normal rules of debits and credits for expense accounts.