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 company purchases a logo for cash, which account is debited in the journal entry?

Accounts Payable

Revenue

Cash

Intangible Assets

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Verified step by step guidance

Step 1: Understand the nature of the transaction. The company is purchasing a logo, which is considered an intangible asset because it does not have physical substance but provides future economic benefits.

Step 2: Identify the accounts involved in the transaction. Since the logo is purchased for cash, the accounts affected are 'Intangible Assets' and 'Cash'.

Step 3: Determine the type of account for 'Intangible Assets' and 'Cash'. 'Intangible Assets' is an asset account, and 'Cash' is also an asset account.

Step 4: Apply the rules of debit and credit. When an asset is acquired, the asset account (Intangible Assets) is debited to increase its balance. The 'Cash' account is credited to decrease its balance because cash is being used to pay for the logo.

Step 5: Record the journal entry. Debit 'Intangible Assets' for the cost of the logo and credit 'Cash' for the same amount to reflect the payment made.