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 receives $10,000 in cash from a customer, which of the following journal entries is correct?

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

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

Debit Cash $10,000; Credit Accounts Payable $10,000

Debit Accounts Receivable $10,000; Credit Cash $10,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. The company is receiving $10,000 in cash from a customer, which indicates an inflow of cash. This is typically recorded as an increase in the Cash account, which is an asset account.

Step 2: Recall the rules of debits and credits. Assets increase with a debit and decrease with a credit. Since cash is an asset and it is increasing, the Cash account should be debited.

Step 3: Determine the corresponding account to credit. The cash received is likely related to revenue earned by the company. Revenue accounts increase with a credit, so the Revenue account should be credited.

Step 4: Write the journal entry. Based on the analysis, the correct journal entry is: Debit Cash $10,000; Credit Revenue $10,000. This reflects the increase in cash and the recognition of revenue.

Step 5: Eliminate incorrect options. Review the other options provided in the problem and confirm why they are incorrect. For example, 'Debit Revenue $10,000; Credit Cash $10,000' is incorrect because revenue is not debited when cash is received. Similarly, 'Debit Accounts Receivable $10,000; Credit Cash $10,000' is incorrect because accounts receivable is not involved in this transaction.