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 best describes a key feature of the double-entry financial record keeping system?

Each transaction is recorded in the financial statements immediately, bypassing journals and ledgers.

Every transaction affects at least two accounts, with total debits always equaling total credits.

Transactions are only recorded when cash is received or paid.

Only revenue and expense accounts are affected by each transaction.

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Verified step by step guidance

Understand the concept of the double-entry financial record-keeping system: This system is based on the principle that every financial transaction affects at least two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Recognize the importance of debits and credits: In double-entry accounting, every transaction is recorded with a debit in one account and a corresponding credit in another account. The total debits must always equal the total credits.

Eliminate incorrect options: Review the provided choices and identify statements that contradict the principles of double-entry accounting. For example, transactions bypassing journals and ledgers or only recording cash transactions are not features of this system.

Focus on the correct feature: The key feature of double-entry accounting is that every transaction affects at least two accounts, maintaining the balance between debits and credits.

Conclude with the correct understanding: The correct answer is the option stating that every transaction affects at least two accounts, with total debits always equaling total credits. This ensures the integrity and accuracy of financial records.