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

Alan is recording payroll that was processed outside of QuickBooks. Which of the following journal entries correctly records the payment of employee wages?

Debit Payroll Tax Expense; Credit Wages Expense

Debit Wages Expense; Credit Cash

Debit Wages Payable; Credit Wages Expense

Debit Cash; Credit Wages Expense

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Verified step by step guidance

Understand the nature of the transaction: Alan is recording payroll processed outside of QuickBooks, which involves paying employee wages. This means the journal entry should reflect the reduction in cash and the recognition of wages expense.

Recall the accounting principle: Expenses are debited to increase their balance, as they reduce equity. Cash is credited to decrease its balance, as it represents an outflow of funds.

Analyze the options provided: The correct journal entry should debit Wages Expense (to record the expense incurred) and credit Cash (to reflect the payment made).

Eliminate incorrect options: For example, 'Debit Payroll Tax Expense; Credit Wages Expense' is incorrect because payroll tax expense is not the same as wages expense. Similarly, 'Debit Wages Payable; Credit Wages Expense' is incorrect because wages payable is a liability account, not relevant here.

Select the correct journal entry: Based on the analysis, the correct journal entry is 'Debit Wages Expense; Credit Cash,' as it properly reflects the payment of employee wages.