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

What would be the correct journal entry to record a $3,000 cash sale of merchandise?

Debit Cash $3,000; Credit Sales Revenue $3,000

Debit Cash $3,000; Credit Accounts Payable $3,000

Debit Sales Revenue $3,000; Credit Cash $3,000

Debit Accounts Receivable $3,000; Credit Sales Revenue $3,000

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Verified step by step guidance

Understand the nature of the transaction: A cash sale of merchandise means the company receives cash immediately in exchange for goods sold. This impacts both the Cash account and the Sales Revenue account.

Identify the accounts involved: Since cash is received, the Cash account will be debited (increased). Sales Revenue, which represents income earned from selling goods, will be credited (increased).

Determine the correct journal entry format: In accounting, debits are recorded on the left side and credits on the right side. For this transaction, Debit Cash $3,000 and Credit Sales Revenue $3,000.

Eliminate incorrect options: Review the provided options and rule out entries that do not align with the transaction. For example, Accounts Payable is not involved in a cash sale, and Accounts Receivable is used for credit sales, not cash sales.

Finalize the journal entry: The correct journal entry to record the $3,000 cash sale of merchandise is Debit Cash $3,000; Credit Sales Revenue $3,000.