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 statements is correct regarding a journal in accounting?

A journal summarizes account balances at the end of the period.

A journal is used exclusively to prepare financial statements.

A journal only records credit transactions and excludes debits.

A journal is a chronological record of all business transactions, showing both debits and credits for each entry.

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Verified step by step guidance

Understand the concept of a journal in accounting: A journal is a book or digital record where all business transactions are recorded in chronological order. It includes both debit and credit entries for each transaction.

Clarify the purpose of a journal: It serves as the first step in the accounting cycle, capturing the details of transactions before they are posted to the ledger accounts.

Analyze the incorrect options: Review why the other statements are incorrect. For example, a journal does not summarize account balances (this is done in the ledger), nor is it exclusively used for preparing financial statements, and it records both debit and credit transactions, not just credit transactions.

Identify the correct statement: The correct statement is that a journal is a chronological record of all business transactions, showing both debits and credits for each entry.

Relate the journal to the accounting cycle: Explain how journal entries are later posted to ledger accounts, which are then used to prepare trial balances and financial statements.