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 steps of the accounting cycle involves recording transactions by using debits and credits in the general journal?

Posting to the ledger

Journalizing

Analyzing source documents

Preparing a trial balance

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Verified step by step guidance

Understand the accounting cycle: The accounting cycle is a series of steps that businesses follow to record and report financial transactions. It includes analyzing transactions, journalizing, posting to the ledger, preparing a trial balance, and more.

Focus on journalizing: Journalizing is the process of recording transactions in the general journal using debits and credits. This step ensures that each transaction is properly documented with the correct accounts and amounts.

Learn the role of debits and credits: Debits and credits are fundamental to double-entry accounting. Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts. Each transaction must balance, meaning total debits equal total credits.

Differentiate journalizing from other steps: Journalizing is distinct from analyzing source documents (which involves reviewing invoices, receipts, etc.), posting to the ledger (transferring journal entries to individual accounts), and preparing a trial balance (summarizing account balances to check for errors).

Apply journalizing in practice: To journalize a transaction, identify the accounts affected, determine whether each account is debited or credited, and record the transaction in the general journal with a description and date.