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 an expense is debited, which of the following accounts is most likely to be credited?

Equipment

Accounts Receivable

Cash

Revenue

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Verified step by step guidance

Understand the nature of the transaction: When an expense is incurred, it typically represents a cost or outflow of resources. Expenses are recorded as debits because they reduce equity in the accounting equation.

Identify the account that is most likely credited: In double-entry accounting, every debit must have a corresponding credit. The account credited will represent the source of funds or the reduction in an asset used to pay for the expense.

Analyze the options provided: Equipment is an asset account and is unlikely to be credited for an expense unless the expense involves depreciation or disposal of equipment. Accounts Receivable is an asset account and is not typically credited for expenses. Revenue is a credit account but is unrelated to expenses in this context.

Focus on Cash: Cash is the most likely account to be credited when an expense is paid, as it represents the outflow of money used to settle the expense.

Conclude the reasoning: When an expense is debited, the corresponding credit is most likely to the Cash account, as this reflects the payment of the expense in most scenarios.