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

Alex invested \$30,000 in cash in his business. How will this transaction be recorded in the ledger accounts?

Debit Revenue \$30,000; Credit Cash \$30,000

Debit Cash \$30,000; Credit Owner's Capital \$30,000

Debit Cash \$30,000; Credit Revenue \$30,000

Debit Owner's Capital \$30,000; Credit Cash \$30,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. Alex is investing cash into his business, which increases the business's assets (Cash) and also increases the owner's equity (Owner's Capital).

Step 2: Recall the accounting equation: Assets = Liabilities + Owner's Equity. Since cash is an asset and the investment increases owner's equity, both sides of the equation remain balanced.

Step 3: Determine the accounts affected. The Cash account (an asset) will be debited because it is increasing, and the Owner's Capital account (an equity account) will be credited because it is also increasing.

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 Cash $30,000 and Credit Owner's Capital $30,000.

Step 5: Record the transaction in the ledger accounts. The Cash account will show a debit entry of $30,000, and the Owner's Capital account will show a credit entry of $30,000, reflecting the investment made by Alex.