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 transactions would require a journal entry that includes both a debit and a credit?

Counting inventory at year-end

Preparing a trial balance

Calculating depreciation expense for internal analysis only

Recording the purchase of equipment for cash

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Verified step by step guidance

Understand the concept of a journal entry: A journal entry is a record of a financial transaction in the accounting system, and it always includes at least one debit and one credit to maintain the accounting equation (Assets = Liabilities + Equity).

Analyze the given options: Transactions like counting inventory, preparing a trial balance, or calculating depreciation for internal analysis do not involve actual financial transactions that affect accounts. These are procedural or analytical tasks and do not require journal entries.

Focus on the correct answer: Recording the purchase of equipment for cash involves a financial transaction where one account increases (equipment asset) and another decreases (cash asset). This requires a journal entry with both a debit and a credit.

Determine the accounts involved: The purchase of equipment increases the Equipment account (an asset), which is debited, and decreases the Cash account (another asset), which is credited.

Structure the journal entry: The journal entry would look like this: Debit the Equipment account for the purchase amount and Credit the Cash account for the same amount, ensuring the accounting equation remains balanced.