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 is the correct sequence of steps to calculate the balance of an account in the general ledger?

Add all debit entries and ignore credit entries.

Subtract each credit entry from each debit entry as you record them.

Add all debit entries, add all credit entries, then subtract total credits from total debits.

Add all credit entries, then divide by the number of debit entries.

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Verified step by step guidance

Step 1: Understand the purpose of the general ledger account balance calculation. The general ledger is used to track all financial transactions for a specific account, and the balance is determined by comparing debits and credits.

Step 2: Identify the correct method for calculating the balance. The correct sequence is to add all debit entries together, add all credit entries together, and then subtract the total credits from the total debits.

Step 3: Begin by summing up all debit entries in the account. Debit entries represent increases in assets or expenses and decreases in liabilities, equity, or revenue.

Step 4: Next, sum up all credit entries in the account. Credit entries represent increases in liabilities, equity, or revenue and decreases in assets or expenses.

Step 5: Finally, subtract the total credit entries from the total debit entries to determine the account balance. If the result is positive, it indicates a debit balance; if negative, it indicates a credit balance.