Multiple Choice
Which of the following is the correct journal entry when a coin collector buys a set of coins for \$500 in cash?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
In double-entry accounting, an account is said to have a debit balance if which of the following is true?
A
The account has equal total debits and total credits, resulting in a zero balance.
B
The total debits recorded in the account exceed the total credits recorded in the account.
C
The total credits recorded in the account exceed the total debits recorded in the account.
D
The account is an equity account, so it must always have a debit balance.
Verified step by step guidance1
Understand that in double-entry accounting, every account has two sides: debits and credits. Debits are recorded on the left side, and credits on the right side.
Recall that the balance of an account is determined by comparing the total debits and total credits recorded in that account.
Know that an account has a debit balance when the total amount of debits exceeds the total amount of credits in that account.
Recognize that if total debits equal total credits, the account balance is zero, and if total credits exceed total debits, the account has a credit balance.
Note that the type of account (asset, liability, equity, etc.) influences whether it normally has a debit or credit balance, but the debit balance condition depends solely on debits exceeding credits.
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