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

In double-entry accounting, which of the following statements is correct?

Debits always increase all types of accounts.

Every transaction affects at least two accounts, with total debits always equaling total credits.

Credits are only used to record increases in asset accounts.

A transaction can be recorded with only a single entry if it is immaterial.

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Verified step by step guidance

Understand the concept of double-entry accounting: Double-entry accounting is a system where every transaction affects at least two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Clarify the role of debits and credits: Debits and credits are used to record changes in accounts. Debits do not always increase all types of accounts; they increase asset and expense accounts but decrease liability, equity, and revenue accounts. Credits have the opposite effect.

Analyze the statement 'Every transaction affects at least two accounts, with total debits always equaling total credits': This is correct because double-entry accounting requires that for every debit entry, there is an equal and corresponding credit entry to maintain balance.

Evaluate the statement 'Credits are only used to record increases in asset accounts': This is incorrect because credits decrease asset accounts and increase liability, equity, and revenue accounts.

Assess the statement 'A transaction can be recorded with only a single entry if it is immaterial': This is incorrect because double-entry accounting requires at least two accounts to be affected, regardless of the materiality of the transaction.