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 best describes the concept of double-entry accounting?

Transactions are recorded only when cash is received or paid.

Only revenue and expense accounts are affected by each transaction.

Every transaction is recorded with equal debits and credits in at least two accounts.

Each transaction is recorded only once in a single account.

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Verified step by step guidance

Understand the concept of double-entry accounting: Double-entry accounting is a fundamental principle in financial accounting where every transaction affects at least two accounts, ensuring the accounting equation (Assets = Liabilities + Equity) remains balanced.

Recognize the key feature of double-entry accounting: For every transaction, there are equal debits and credits recorded in the accounts. This ensures that the total debits always equal the total credits.

Eliminate incorrect options: Review the provided choices and identify statements that do not align with the principle of double-entry accounting. For example, transactions are not recorded only when cash is received or paid, and each transaction is not recorded only once in a single account.

Focus on the correct option: The correct description of double-entry accounting is that every transaction is recorded with equal debits and credits in at least two accounts. This ensures the integrity and accuracy of financial records.

Apply the concept: Use this understanding to analyze transactions in practice, ensuring that for every debit entry, there is a corresponding credit entry in another account, maintaining the balance of the accounting equation.