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

An invoice is referred to as a credit invoice for a buyer and as a debit invoice for the seller. Which of the following correctly fills in the blanks?

debit invoice; credit invoice

purchase invoice; sales invoice

credit note; debit note

sales invoice; purchase invoice

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Verified step by step guidance

Understand the concept of invoices: In financial accounting, invoices are documents issued by a seller to a buyer, detailing the goods or services provided and the amount owed. The terms 'credit invoice' and 'debit invoice' are used to describe the perspective of the buyer and seller.

Clarify the terminology: A 'credit invoice' for the buyer means the buyer is recording a liability (accounts payable) because they owe money to the seller. For the seller, the same invoice is a 'debit invoice' because it represents an asset (accounts receivable) as they are expecting payment.

Relate the terms to common accounting documents: A 'purchase invoice' is the buyer's perspective, recording the purchase of goods or services. A 'sales invoice' is the seller's perspective, recording the sale of goods or services.

Understand the role of credit notes and debit notes: A 'credit note' is issued by the seller to reduce the amount owed by the buyer (e.g., for returned goods). A 'debit note' is issued by the buyer to request a reduction in the amount owed (e.g., for damaged goods).

Match the correct terms: Based on the explanation, the correct pairing is 'sales invoice' for the seller and 'purchase invoice' for the buyer, as these terms align with the perspectives of the parties involved in the transaction.