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 statements is accurate regarding double-entry bookkeeping?

Credits are only used to record decreases in asset accounts.

Only revenue transactions require both a debit and a credit entry.

Debits always increase all types of accounts.

Every transaction affects at least two accounts, with total debits always equaling total credits.

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Verified step by step guidance

Understand the concept of double-entry bookkeeping: Double-entry bookkeeping is a fundamental accounting principle where every transaction affects at least two accounts, ensuring the accounting equation (Assets = Liabilities + Equity) remains balanced.

Clarify the role of debits and credits: Debits and credits are used to record changes in accounts. Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts. They work together to maintain balance in the ledger.

Analyze the statement 'Credits are only used to record decreases in asset accounts': This is incorrect because credits can also increase liability, equity, and revenue accounts.

Evaluate the statement 'Only revenue transactions require both a debit and a credit entry': This is incorrect because all transactions in double-entry bookkeeping require both a debit and a credit entry, regardless of the type of transaction.

Confirm the correct statement: The accurate statement is 'Every transaction affects at least two accounts, with total debits always equaling total credits.' This reflects the essence of double-entry bookkeeping, ensuring the ledger remains balanced.