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 journal entries correctly records the purchase of a delivery truck by Yoshi Company for $25,000 cash?

Debit Delivery Expense $25,000; Credit Accounts Payable $25,000

Debit Accounts Payable $25,000; Credit Delivery Trucks $25,000

Debit Cash $25,000; Credit Delivery Trucks $25,000

Debit Delivery Trucks $25,000; Credit Cash $25,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. Yoshi Company is purchasing a delivery truck for $25,000 cash. This is an asset acquisition, and the payment is made in cash, which reduces the cash account.

Step 2: Identify the accounts involved. The delivery truck is an asset, so it will be recorded in the 'Delivery Trucks' account. Cash is also an asset, but since it is being used to pay for the truck, it will decrease.

Step 3: Determine the type of accounts and their normal balances. 'Delivery Trucks' is an asset account, and assets increase with a debit. 'Cash' is also an asset account, but it decreases with a credit.

Step 4: Apply the double-entry accounting principle. For every transaction, debits must equal credits. In this case, debit the 'Delivery Trucks' account for $25,000 to record the acquisition of the truck, and credit the 'Cash' account for $25,000 to reflect the payment.

Step 5: Write the journal entry. The correct journal entry is: Debit Delivery Trucks $25,000; Credit Cash $25,000. This ensures the transaction is properly recorded in the company's books.