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 cash sale of $20?

Debit Accounts Receivable $20; Credit Sales Revenue $20

Debit Sales Revenue $20; Credit Cash $20

Debit Cash $20; Credit Accounts Payable $20

Debit Cash $20; Credit Sales Revenue $20

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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 the Cash account and the Sales Revenue account.

Step 2: Identify the accounts involved. Since cash is received, the Cash account will be debited (increased). Sales Revenue, which represents income earned, will be credited (increased).

Step 3: Recall the accounting equation and double-entry bookkeeping principles. Debits increase asset accounts like Cash, while credits increase revenue accounts like Sales Revenue.

Step 4: Write the journal entry format. The debit entry will be: Debit Cash $20. The credit entry will be: Credit Sales Revenue $20.

Step 5: Ensure the journal entry balances. The total debits ($20) must equal the total credits ($20), maintaining the integrity of the accounting equation.