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 best describes how a deduction from an employee's paycheck should be recorded in the employer's accounting journal?

Debit Salaries Payable; Credit Salaries Expense

Debit Cash; Credit Salaries Payable

Debit Salaries Expense; Credit Cash

Debit Salaries Expense; Credit Various Payable Accounts (such as Taxes Payable, Insurance Payable)

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Verified step by step guidance

Step 1: Understand the context of the problem. The question is asking how deductions from an employee's paycheck should be recorded in the employer's accounting journal. Deductions typically include items such as taxes, insurance, and other withholdings.

Step 2: Recall the accounting principle that expenses incurred by the employer, such as salaries, are recorded as a debit to Salaries Expense. This reflects the cost of compensating employees.

Step 3: Recognize that deductions from the employee's paycheck are liabilities for the employer, as these amounts are owed to third parties (e.g., government for taxes, insurance companies). These liabilities are recorded as credits to Various Payable Accounts, such as Taxes Payable or Insurance Payable.

Step 4: Note that the employer does not directly credit Cash for these deductions at this stage because the deductions are not yet paid out. Instead, they are recorded as payables until the employer remits the amounts to the respective entities.

Step 5: Summarize the journal entry: Debit Salaries Expense to reflect the total salary cost, and Credit Various Payable Accounts to record the deductions owed to third parties.