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 method of inventory purchase would result in an increase to the 'Inventory' account through a debit entry?

Purchasing inventory on account (credit purchase)

Selling inventory for cash

Recording depreciation expense

Paying off a supplier liability

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Verified step by step guidance

Understand the concept of the 'Inventory' account: The 'Inventory' account represents the value of goods a company holds for sale. It is an asset account, and increases to asset accounts are recorded as debit entries in financial accounting.

Analyze the first option, 'Purchasing inventory on account (credit purchase)': When inventory is purchased on account, the company acquires goods and records an increase in the 'Inventory' account (debit) while simultaneously recording a liability in the 'Accounts Payable' account (credit). This is a typical transaction that increases the 'Inventory' account.

Evaluate the second option, 'Selling inventory for cash': Selling inventory decreases the 'Inventory' account because the goods are no longer held by the company. This transaction would involve a credit to the 'Inventory' account, not a debit.

Examine the third option, 'Recording depreciation expense': Depreciation expense is related to fixed assets, not inventory. It reduces the value of fixed assets over time and does not affect the 'Inventory' account.

Consider the fourth option, 'Paying off a supplier liability': Paying off a supplier liability reduces the 'Accounts Payable' account (credit) and cash (debit). It does not directly impact the 'Inventory' account, as the inventory was already recorded when it was purchased.