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 a non-sufficient funds (NSF) check is discovered and requires an adjustment to the cash balance, which journal entry should be recorded?

Debit Accounts Receivable; Credit Cash

Debit Cash; Credit Accounts Receivable

Debit Cash; Credit Bank Service Charges

Debit Bank Service Charges; Credit Cash

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Verified step by step guidance

Understand the concept of a non-sufficient funds (NSF) check: An NSF check occurs when a check deposited into a bank account is returned because the payer's account does not have enough funds to cover the check amount. This requires an adjustment to the cash balance and accounts affected.

Identify the accounts involved: When an NSF check is discovered, the cash balance in the bank account decreases because the check amount is not collectible. The amount needs to be reclassified as Accounts Receivable since the payer still owes the money.

Determine the journal entry: To adjust for the NSF check, you need to debit Accounts Receivable to increase the amount owed by the payer and credit Cash to decrease the cash balance in the bank account.

Write the journal entry: The journal entry will be structured as follows: Debit Accounts Receivable (to record the amount owed by the payer) and Credit Cash (to reduce the cash balance).

Review the options provided: Compare the correct journal entry (Debit Accounts Receivable; Credit Cash) with the options listed in the problem to confirm the correct answer.