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

Providing services to customers on account would be recorded with a:

Debit to Service Revenue and credit to Accounts Receivable

Debit to Cash and credit to Service Revenue

Debit to Service Revenue and credit to Cash

Debit to Accounts Receivable and credit to Service Revenue

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Verified step by step guidance

Understand the concept of 'providing services on account': This means the company has performed a service but has not yet received cash payment. Instead, the customer promises to pay later, creating an Accounts Receivable.

Recall the accounting principle of double-entry bookkeeping: Every transaction affects at least two accounts, with one account debited and another credited.

Identify the accounts involved: Since the company is providing services, Service Revenue is credited to reflect the income earned. Accounts Receivable is debited to record the amount owed by the customer.

Apply the rule for debits and credits: Debits increase asset accounts (like Accounts Receivable), while credits increase revenue accounts (like Service Revenue).

Record the journal entry: Debit Accounts Receivable to increase the asset account and credit Service Revenue to increase the revenue account, ensuring the transaction is properly recorded.