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

A credit sale of $5,275 to a customer would result in which of the following journal entries?

Debit Sales Revenue $5,275; Credit Accounts Receivable $5,275

Debit Accounts Receivable $5,275; Credit Sales Revenue $5,275

Debit Cash $5,275; Credit Sales Revenue $5,275

Debit Sales Revenue $5,275; Credit Cash $5,275

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Verified step by step guidance

Understand the nature of the transaction: A credit sale means the company has sold goods or services to a customer on credit, meaning the customer will pay at a later date. This does not involve cash immediately.

Identify the accounts affected: For a credit sale, the two accounts involved are 'Accounts Receivable' (an asset account) and 'Sales Revenue' (a revenue account). Accounts Receivable increases because the company expects payment in the future, and Sales Revenue increases because the company has earned revenue from the sale.

Determine the journal entry format: In accounting, debits and credits must balance. For this transaction, 'Accounts Receivable' is debited because it is increasing (assets increase with debits), and 'Sales Revenue' is credited because it is increasing (revenues increase with credits).

Write the journal entry: The journal entry for this transaction would be: Debit Accounts Receivable $5,275; Credit Sales Revenue $5,275. This reflects the increase in assets and revenue due to the credit sale.

Review the incorrect options: The other options provided involve cash, which is not part of a credit sale, or incorrectly reverse the debit and credit accounts. Ensure you understand why the correct entry matches the nature of the transaction.