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 journal entry to record the receipt of $5,000 cash for consulting services provided on December 31?

Debit Service Revenue $5,000; Credit Cash $5,000

Debit Cash $5,000; Credit Service Revenue $5,000

Debit Accounts Receivable $5,000; Credit Service Revenue $5,000

Debit Cash $5,000; Credit Accounts Receivable $5,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. The company has received $5,000 in cash for consulting services provided. This means cash is increasing, and revenue is being recognized for the services performed.

Step 2: Recall the rules of debits and credits. An increase in assets (like cash) is recorded as a debit, and an increase in revenue is recorded as a credit.

Step 3: Identify the accounts involved. The accounts affected are 'Cash' (an asset account) and 'Service Revenue' (a revenue account).

Step 4: Determine the correct journal entry. Since cash is increasing, it will be debited for $5,000. Since revenue is being recognized, 'Service Revenue' will be credited for $5,000.

Step 5: Verify the journal entry format. The correct journal entry is: Debit Cash $5,000; Credit Service Revenue $5,000. This reflects the increase in cash and recognition of revenue for the consulting services provided.