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 an electronic funds transfer (EFT) is used to pay cash on account, which account is credited in the journal entry?

Accounts Payable

Accounts Receivable

Cash

Sales Revenue

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Verified step by step guidance

Understand the nature of an electronic funds transfer (EFT): An EFT is a method of transferring money electronically from one account to another, often used to settle obligations such as accounts payable.

Identify the accounts involved in the transaction: When paying cash on account using EFT, the accounts affected are typically 'Cash' and 'Accounts Payable.'

Determine the impact on 'Accounts Payable': Since the payment is made to settle an obligation, the 'Accounts Payable' account is debited to reduce the liability.

Determine the impact on 'Cash': The 'Cash' account is credited because the payment reduces the company's cash balance.

Record the journal entry: The journal entry for this transaction would involve debiting 'Accounts Payable' and crediting 'Cash' to reflect the payment made using EFT.