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 statements about general ledger accounts is true?

A debit entry always increases a liability account.

A debit entry always increases an asset account.

A credit entry always increases an expense account.

A credit entry always increases an asset account.

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Verified step by step guidance

Step 1: Begin by understanding the basic rules of debits and credits in accounting. In the double-entry accounting system, debits and credits are used to record transactions. Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts.

Step 2: Analyze the first statement: 'A debit entry always increases a liability account.' This is incorrect because a debit entry decreases liability accounts, not increases them.

Step 3: Evaluate the second statement: 'A debit entry always increases an asset account.' This is correct because debits are used to increase asset accounts, such as cash, accounts receivable, and inventory.

Step 4: Examine the third statement: 'A credit entry always increases an expense account.' This is incorrect because credits decrease expense accounts, not increase them.

Step 5: Assess the fourth statement: 'A credit entry always increases an asset account.' This is incorrect because credits decrease asset accounts, not increase them.