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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

Given the following data for Hermann Corporation:\begin{align}\text{Cash (beginning)} & : \$10,000 \\\text{Service Revenue} & : \$5,000 \\\text{Salaries Expense} & : \$2,000 \\\text{Cash (ending)} & : \$12,000 \\\end{align}Which of the following journal entries correctly records the receipt of service revenue in cash?

Debit Service Revenue $5,000; Credit Cash $5,000

Debit Cash $2,000; Credit Salaries Expense $2,000

Debit Cash $5,000; Credit Service Revenue $5,000

Debit Salaries Expense $5,000; Credit Cash $5,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. Service revenue is earned and received in cash, which means cash increases and service revenue is recognized as income.

Step 2: Recall the accounting equation: Assets = Liabilities + Equity. Cash is an asset, and service revenue affects equity by increasing retained earnings.

Step 3: Determine the correct journal entry. When cash is received, it is debited (increased), and service revenue is credited (recognized as income).

Step 4: Analyze the options provided. The correct journal entry should reflect a debit to Cash for $5,000 and a credit to Service Revenue for $5,000.

Step 5: Verify the logic of the journal entry. Debiting Cash increases the asset account, and crediting Service Revenue increases equity through income recognition.