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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

In the context of recording journal entries, which of the following best describes the effect of a debit entry to the Cash account?

It decreases the Cash account balance.

It transfers cash to retained earnings.

It has no effect on the Cash account balance.

It increases the Cash account balance.

Previous problemNext problem

Verified step by step guidance

Understand the nature of the Cash account: In accounting, the Cash account is an asset account. Asset accounts typically have a normal debit balance, meaning increases to the account are recorded as debits.

Review the effect of a debit entry: A debit entry to an asset account, such as Cash, increases the account balance. This is because debits represent inflows or additions to assets.

Contrast with other types of accounts: For liability or equity accounts, a debit entry would decrease the balance. However, for asset accounts like Cash, the opposite is true—debits increase the balance.

Eliminate incorrect options: The options suggesting that a debit decreases the Cash account balance, transfers cash to retained earnings, or has no effect are incorrect because they do not align with the fundamental accounting principles for asset accounts.

Conclude the correct effect: A debit entry to the Cash account increases the account balance, as it represents an inflow of cash or an addition to the asset.