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

The journal entry to record employer tax accruals includes a debit to:

Payroll Tax Expense

Cash

FICA Taxes Payable

Salaries Payable

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Understand the concept of employer tax accruals: These are taxes that the employer is responsible for paying, such as Social Security (FICA), Medicare, and unemployment taxes. These taxes are recorded as expenses for the employer.

Identify the accounts involved: Employer tax accruals typically involve a debit to an expense account (Payroll Tax Expense) and a credit to liability accounts (e.g., FICA Taxes Payable, Unemployment Taxes Payable). Cash is not credited at this stage because the taxes are accrued, not yet paid.

Determine the journal entry structure: In accounting, a debit increases expense accounts, while a credit increases liability accounts. Therefore, the Payroll Tax Expense account will be debited to reflect the employer's tax expense.

Credit the appropriate liability accounts: The liability accounts, such as FICA Taxes Payable and other employer tax liabilities, will be credited to show the amount owed by the employer to the government.

Review the journal entry: Ensure the debit to Payroll Tax Expense matches the total of the credits to the liability accounts, maintaining the accounting equation (Assets = Liabilities + Equity).