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

When recording bank deposits in the journal, which of the following is required?

Debit the Cash account to increase its balance.

Debit the Bank Fees account to increase its balance.

Credit the Revenue account to decrease its balance.

Credit the Cash account to increase its balance.

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Verified step by step guidance

Understand the nature of the transaction: A bank deposit increases the cash balance in the company's account. This is an inflow of cash, which affects the Cash account in the journal.

Recall the accounting principle of debits and credits: Debits increase asset accounts (like Cash), while credits decrease asset accounts. Conversely, credits increase revenue accounts, and debits decrease revenue accounts.

Determine the correct account to debit: Since the deposit increases the Cash account, you need to debit the Cash account to reflect the increase in the journal.

Evaluate the other options: Debit the Bank Fees account is incorrect because bank fees are an expense, not related to deposits. Credit the Revenue account is incorrect because revenue is not being decreased in this transaction. Credit the Cash account is incorrect because credits decrease asset accounts, which is not the case here.

Record the transaction in the journal: Debit the Cash account to increase its balance, and credit the corresponding account (e.g., Revenue or Accounts Receivable) to reflect the source of the deposit.