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 is the correct journal entry to record the payment of a liability in cash?

Debit Cash; Credit Liability

Debit Revenue; Credit Cash

Debit Expense; Credit Revenue

Debit Liability; Credit Cash

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Verified step by step guidance

Understand the concept of a liability: A liability represents an obligation or debt owed by a company to another party, typically recorded on the balance sheet.

Recognize the impact of payment: When a liability is paid off, the liability account decreases (debit) because the obligation is being settled, and cash decreases (credit) because cash is being used to make the payment.

Recall the rules of debits and credits: Debits increase asset accounts and decrease liability accounts, while credits decrease asset accounts and increase liability accounts.

Apply the journal entry format: To record the payment of a liability, you would debit the liability account to reduce it and credit the cash account to reflect the decrease in cash.

Verify the correct journal entry: Based on the explanation, the correct journal entry is 'Debit Liability; Credit Cash,' as this reflects the reduction of the liability and the use of cash for payment.