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

When recording a partner's share of foreign income reported on Schedule K-2/K-3 for 2022, which journal entry correctly reflects the recognition of income in the partnership's books?

Debit Income Summary; Credit Partner's Capital Account

Debit Foreign Income; Credit Income Summary

Debit Foreign Income; Credit Partner's Capital Account

Debit Foreign Income Receivable; Credit Foreign Income

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Verified step by step guidance

Understand the context: The problem involves recording a partner's share of foreign income in the partnership's books. This requires knowledge of how foreign income is reported and recognized in accounting records.

Identify the accounts involved: The key accounts mentioned in the options are 'Foreign Income,' 'Income Summary,' 'Partner's Capital Account,' and 'Foreign Income Receivable.' Each account serves a specific purpose in the journal entry.

Determine the correct recognition process: Foreign income earned by the partnership is typically recorded as income in the 'Foreign Income' account. This income is then summarized in the 'Income Summary' account before being allocated to the partner's capital account or other relevant accounts.

Analyze the options: Evaluate each option to determine which one correctly reflects the recognition of foreign income. For example, 'Debit Foreign Income; Credit Income Summary' suggests that foreign income is first recorded in the 'Foreign Income' account and then transferred to the 'Income Summary' account.

Select the correct journal entry: Based on the analysis, choose the journal entry that aligns with the proper accounting treatment for recognizing foreign income in the partnership's books. Ensure the debit and credit entries are balanced and reflect the economic reality of the transaction.