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 firm pays for supplies using a credit card, which account should be credited in the journal entry?

Cash

Accounts Payable

Supplies Expense

Credit Card Payable

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Verified step by step guidance

Understand the transaction: The firm is paying for supplies using a credit card. This means the firm is incurring a liability (Credit Card Payable) rather than immediately using cash or creating an accounts payable entry.

Identify the accounts involved: The accounts affected are 'Supplies Expense' (or 'Supplies' if the purchase is recorded as an asset) and 'Credit Card Payable' (a liability account).

Determine the journal entry structure: In every journal entry, there must be at least one debit and one credit. Debits increase expenses or assets, while credits increase liabilities or equity.

Record the debit: Debit the 'Supplies Expense' account (or 'Supplies' if treated as an asset) to reflect the cost of the supplies purchased.

Record the credit: Credit the 'Credit Card Payable' account to recognize the liability incurred by using the credit card for the purchase.