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

Given the following journal entry:\[\begin{align}\text{Cash} \quad & \text{Debit} \quad \$5,000 \\\text{Service Revenue} \quad & \text{Credit} \quad \$5,000 \end{align}\]What does this journal entry describe?

Borrowing cash from a bank

Paying cash for office supplies

Receiving cash for services performed

Paying salaries to employees

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Verified step by step guidance

Step 1: Begin by analyzing the journal entry provided. A journal entry records the financial transactions of a business, showing the accounts affected and whether they are debited or credited.

Step 2: Observe the accounts involved in the journal entry. In this case, 'Cash' is debited for $5,000, and 'Service Revenue' is credited for $5,000.

Step 3: Understand the meaning of debits and credits. A debit to 'Cash' indicates an increase in the cash account, while a credit to 'Service Revenue' indicates an increase in revenue earned by the business.

Step 4: Consider the context of the transaction. The increase in 'Cash' suggests that the business received money, and the increase in 'Service Revenue' implies that the money was earned from providing services.

Step 5: Conclude that this journal entry describes the receipt of cash for services performed, as it aligns with the increase in both cash and revenue accounts.