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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

If Sketchy National Bank is robbed of $10 in cash, which of the following journal entries correctly records the loss?

Debit Cash $10; Credit Loss from Theft $10

Debit Accounts Receivable $10; Credit Cash $10

Debit Loss from Theft $10; Credit Cash $10

Debit Expense $10; Credit Revenue $10

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Verified step by step guidance

Understand the nature of the transaction: The bank has experienced a loss of $10 in cash due to theft. This means cash is reduced, and the loss needs to be recorded as an expense.

Identify the accounts involved: The two accounts affected are 'Cash' (an asset account) and 'Loss from Theft' (an expense account). Cash decreases, and the loss is recorded as an expense.

Determine the correct journal entry: In accounting, a decrease in an asset account (Cash) is recorded as a credit, and an increase in an expense account (Loss from Theft) is recorded as a debit.

Apply the double-entry accounting principle: For every transaction, there must be equal debits and credits. In this case, Debit 'Loss from Theft' $10 and Credit 'Cash' $10.

Review the options provided: The correct journal entry is 'Debit Loss from Theft $10; Credit Cash $10,' as it accurately reflects the decrease in cash and the recognition of the expense due to theft.