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

1. Which of the following best describes the information recorded for each transaction in a journal?

Only the total amount of the transaction.

A summary of the company's financial position.

The ending balances of all accounts.

The accounts affected, amounts debited and credited, and a brief explanation.

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Verified step by step guidance

Understand the purpose of a journal in accounting: A journal is a chronological record of all transactions that occur in a business. It serves as the first step in the accounting cycle, capturing detailed information about each transaction.

Identify the key components recorded in a journal entry: For each transaction, the journal records the accounts affected, the amounts debited and credited, and a brief explanation of the transaction. This ensures clarity and accuracy in financial reporting.

Recognize the importance of debits and credits: In double-entry accounting, every transaction affects at least two accounts. One account is debited (increased or decreased depending on the account type), and another is credited (increased or decreased depending on the account type). This maintains the accounting equation: Assets = Liabilities + Equity.

Understand the role of the explanation: A brief explanation is included in the journal entry to provide context for the transaction. This helps users of the financial statements understand the nature of the transaction and its impact on the business.

Review the incorrect options: The other choices (only the total amount, a summary of the company's financial position, and ending balances of all accounts) do not accurately describe the detailed information recorded in a journal. The correct answer is the accounts affected, amounts debited and credited, and a brief explanation.