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 business transactions would be posted in a ledger?

Preparing a budget for office supplies

Forecasting future cash flows

Estimating next year's sales revenue

Recording the purchase of inventory on credit

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Verified step by step guidance

Understand the purpose of a ledger: A ledger is a book or digital record where all financial transactions are posted. It is used to track and organize transactions that affect the financial position of a business.

Identify the nature of the transactions listed: Preparing a budget, forecasting future cash flows, and estimating sales revenue are planning activities and do not involve actual financial transactions. These activities are not recorded in the ledger.

Focus on the transaction involving the purchase of inventory on credit: This transaction directly affects the financial accounts of the business. It impacts both the inventory account (an asset) and the accounts payable account (a liability).

Determine how the transaction is recorded: When inventory is purchased on credit, the ledger entry typically involves debiting the inventory account to increase assets and crediting the accounts payable account to reflect the liability.

Conclude that only transactions involving actual financial activity, such as recording the purchase of inventory on credit, are posted in the ledger. Planning and forecasting activities are not posted in the ledger as they do not represent actual financial transactions.