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 correctly matches the activity to its effect on the general ledger accounts?A company purchases office supplies for cash.

Debit Accounts Payable; Credit Supplies

Debit Cash; Credit Supplies

Debit Supplies Expense; Credit Accounts Payable

Debit Supplies; Credit Cash

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Verified step by step guidance

Step 1: Understand the transaction. The company is purchasing office supplies and paying for them in cash. This means the company is acquiring an asset (supplies) and reducing another asset (cash).

Step 2: Identify the accounts involved. The accounts affected are 'Supplies' (an asset account) and 'Cash' (another asset account).

Step 3: Determine the nature of the accounts. 'Supplies' will increase because the company is acquiring more supplies, and 'Cash' will decrease because the company is paying for the supplies.

Step 4: Apply the rules of debits and credits. In accounting, an increase in an asset account is recorded as a debit, and a decrease in an asset account is recorded as a credit. Therefore, 'Supplies' will be debited, and 'Cash' will be credited.

Step 5: Record the journal entry. The correct journal entry is: Debit 'Supplies' and Credit 'Cash'. This reflects the increase in supplies and the decrease in cash in the general ledger.