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 best describes the correct process for preparing journal entries to record business transactions?

Record only the cash transactions and ignore non-cash items.

Prepare journal entries by recording all debits first at the end of the accounting period.

Identify the accounts affected, determine which accounts are debited and credited, and record the amounts in the journal with proper dates and explanations.

List all accounts in alphabetical order and record only the credits for each transaction.

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Verified step by step guidance

Step 1: Understand the purpose of journal entries. Journal entries are used to record business transactions in the accounting system, ensuring that the financial statements accurately reflect the company's activities.

Step 2: Identify the accounts affected by the transaction. For each transaction, determine which accounts are impacted, such as assets, liabilities, equity, revenue, or expenses.

Step 3: Determine which accounts are debited and credited. Use the rules of debit and credit based on the type of account (e.g., assets increase with debits, liabilities increase with credits).

Step 4: Record the amounts in the journal. Write the debits first, followed by the credits, ensuring the total debits equal the total credits for the transaction.

Step 5: Include proper dates and explanations. Each journal entry should have a date and a brief description of the transaction to provide context and clarity for future reference.