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

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

When Lita Lopez started Biz Consulting by investing $10,000 cash into the business, how should this transaction be recorded in the accounting records?

Debit Owner's Capital $10,000; Credit Cash $10,000

Debit Cash $10,000; Credit Owner's Capital $10,000

Debit Cash $10,000; Credit Consulting Revenue $10,000

Debit Consulting Revenue $10,000; Credit Cash $10,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. Lita Lopez is investing $10,000 cash into the business, which means the business is receiving cash and the owner's equity in the business is increasing.

Step 2: Identify the accounts involved. The two accounts affected are 'Cash' (an asset account) and 'Owner's Capital' (an equity account).

Step 3: Determine the type of account and the impact of the transaction. Cash is an asset account, and it increases with a debit. Owner's Capital is an equity account, and it increases with a credit.

Step 4: Apply the double-entry accounting principle. For every transaction, there must be at least one debit and one credit of equal amounts. In this case, debit the 'Cash' account for $10,000 and credit the 'Owner's Capital' account for $10,000.

Step 5: Record the journal entry. The journal entry would be: Debit Cash $10,000; Credit Owner's Capital $10,000. This reflects the increase in assets (cash) and the increase in equity (owner's capital).