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 is the correct journal entry when you deposit $4,000 in cash into a checking account for your business?

Debit Checking Account $4,000; Credit Cash $4,000

Debit Cash $4,000; Credit Accounts Payable $4,000

Debit Revenue $4,000; Credit Cash $4,000

Debit Cash $4,000; Credit Owner's Equity $4,000

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Verified step by step guidance

Understand the nature of the transaction: Depositing $4,000 in cash into a checking account for your business means transferring money from one asset (Cash) to another asset (Checking Account). This does not involve liabilities, revenue, or equity.

Recall the accounting equation: Assets = Liabilities + Equity. Since this transaction only affects assets, it will involve debiting one asset account and crediting another asset account.

Determine the accounts involved: The Checking Account is the account receiving the deposit, so it will be debited to increase its balance. The Cash account is the account being reduced, so it will be credited to decrease its balance.

Apply the double-entry accounting rule: For every transaction, there must be at least one debit and one credit of equal amounts. In this case, Debit Checking Account $4,000 and Credit Cash $4,000.

Verify the journal entry: Ensure the debit and credit amounts are equal and the accounts affected align with the transaction. The correct journal entry is Debit Checking Account $4,000; Credit Cash $4,000.