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 effect of recording a $1,000 cash sale on a company's journal entries?

Debit Cash $1,000; Credit Accounts Payable $1,000

Debit Sales Revenue $1,000; Credit Cash $1,000

Debit Accounts Receivable $1,000; Credit Sales Revenue $1,000

Debit Cash $1,000; Credit Sales Revenue $1,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. A cash sale means the company receives cash immediately in exchange for goods or services provided. This impacts both the Cash account and the Sales Revenue account.

Step 2: Identify the accounts involved. The Cash account increases because the company receives $1,000 in cash. The Sales Revenue account also increases because the company earns revenue from the sale.

Step 3: Determine the type of accounts. Cash is an asset account, and an increase in assets is recorded as a debit. Sales Revenue is a revenue account, and an increase in revenue is recorded as a credit.

Step 4: Apply the double-entry accounting principle. For every transaction, there must be at least one debit and one credit of equal amounts to keep the accounting equation balanced.

Step 5: Record the journal entry. Debit the Cash account for $1,000 to reflect the increase in cash, and credit the Sales Revenue account for $1,000 to reflect the earned revenue.