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

When recording the journal entry to pay employees for wages earned, which account is typically credited?

Accounts Receivable

Cash

Salaries Payable

Wages Expense

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Verified step by step guidance

Understand the context of the transaction: Paying employees for wages earned involves reducing the company's cash balance and recognizing the expense or liability associated with wages.

Identify the accounts involved: The accounts typically involved in this transaction are 'Cash' (an asset account), 'Wages Expense' (an expense account), and potentially 'Salaries Payable' (a liability account).

Determine the impact on each account: Paying wages reduces the company's cash balance, so 'Cash' is credited. The expense for wages is recognized, so 'Wages Expense' is debited. If wages were previously recorded as a liability in 'Salaries Payable,' this account would also be debited to reduce the liability.

Apply the double-entry accounting principle: For every debit, there must be an equal credit. In this case, the credit is to 'Cash,' and the debit is to 'Wages Expense' or 'Salaries Payable,' depending on whether the wages were previously recorded as a liability.

Record the journal entry: Debit 'Wages Expense' or 'Salaries Payable' and credit 'Cash' to reflect the payment of wages. Ensure the amounts match the actual payment made to employees.