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

Which of the following accounts is debited when recording bad debt expense?

Cash

Accounts Receivable

Bad Debt Expense

Allowance for Doubtful Accounts

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Verified step by step guidance

Understand the concept of bad debt expense: Bad debt expense represents the cost of accounts receivable that a company does not expect to collect. It is recorded to reflect the anticipated losses from uncollectible accounts.

Learn the accounting method used: Companies typically use the allowance method to account for bad debts. This method involves estimating uncollectible accounts and recording them in advance.

Identify the accounts involved: When recording bad debt expense, two accounts are affected: 'Bad Debt Expense' (an expense account) and 'Allowance for Doubtful Accounts' (a contra-asset account).

Determine the journal entry: To record bad debt expense, the 'Bad Debt Expense' account is debited, and the 'Allowance for Doubtful Accounts' account is credited. This reflects the estimated uncollectible amount.

Understand why other accounts are not debited: 'Cash' is not affected because no cash is involved in this transaction, and 'Accounts Receivable' is not directly debited because the allowance method uses the 'Allowance for Doubtful Accounts' to adjust the receivables indirectly.