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 a debit entry in the general ledger for an asset account?

It transfers the balance to a liability account.

It increases the balance of the asset account.

It has no effect on the asset account.

It decreases the balance of the asset account.

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Verified step by step guidance

Step 1: Understand the nature of a debit entry in accounting. In the double-entry accounting system, a debit entry is used to record increases in asset accounts and expense accounts, and decreases in liability accounts, equity accounts, and revenue accounts.

Step 2: Recall the classification of accounts. Asset accounts represent resources owned by the business, such as cash, accounts receivable, inventory, and equipment.

Step 3: Analyze the effect of a debit entry on an asset account. Since asset accounts increase with debit entries, a debit entry will add to the balance of the asset account.

Step 4: Eliminate incorrect options. A debit entry does not transfer the balance to a liability account, does not decrease the balance of the asset account, and does not have no effect on the asset account.

Step 5: Conclude that the correct description is: 'It increases the balance of the asset account.' This aligns with the fundamental principles of accounting.