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 electronic goods store sells a laptop for $1,200 cash. Which of the following is the correct journal entry to record this transaction?

Debit Cash $1,200; Credit Sales Revenue $1,200

Debit Inventory $1,200; Credit Cash $1,200

Debit Sales Revenue $1,200; Credit Cash $1,200

Debit Accounts Receivable $1,200; Credit Sales Revenue $1,200

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Verified step by step guidance

Step 1: Understand the nature of the transaction. The store sells a laptop for $1,200 cash, which means cash is received immediately, and revenue is earned from the sale of the laptop.

Step 2: Identify the accounts involved. The accounts affected are 'Cash' (an asset account) and 'Sales Revenue' (a revenue account). Since cash is received, it increases the asset account, and since revenue is earned, it increases the revenue account.

Step 3: Determine the type of account changes. Cash is an asset account, and receiving cash increases assets, so it should be debited. Sales Revenue is a revenue account, and earning revenue increases revenue, so it should be credited.

Step 4: Apply the journal entry format. The journal entry should follow the format: Debit the account that increases (Cash) and Credit the account that increases (Sales Revenue).

Step 5: Write the journal entry. The correct journal entry is: Debit Cash $1,200; Credit Sales Revenue $1,200. This reflects the increase in cash and the recognition of revenue from the sale.