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

In Howling Wolf's ledger, which of the following transactions would require a debit entry to the Drawings account?

The owner invests additional capital into the business.

The business pays rent for office space.

The owner withdraws cash for personal use.

The business receives cash from a customer.

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Verified step by step guidance

Understand the concept of the Drawings account: The Drawings account is used to record withdrawals made by the owner for personal use. It reduces the owner's equity in the business.

Analyze the transactions provided: Evaluate each transaction to determine its impact on the Drawings account.

Transaction 1: 'The owner invests additional capital into the business.' This transaction increases the owner's equity and would require a credit to the Capital account, not a debit to the Drawings account.

Transaction 2: 'The business pays rent for office space.' This transaction is an expense and would typically involve a debit to the Rent Expense account, not the Drawings account.

Transaction 3: 'The owner withdraws cash for personal use.' This transaction directly reduces the owner's equity and requires a debit entry to the Drawings account to reflect the withdrawal.