Multiple Choice
In the context of recording journal entries in accounting software, what typically happens when you press the Enter key while in a cell of the journal entry form?
103
views
1
rank
2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
When John transfers funds online from his savings account to his checking account, what is the correct journal entry to record this transaction?
A
Debit Checking Account; Credit Savings Account
B
Debit Savings Account; Credit Checking Account
C
Debit Expense; Credit Savings Account
D
Debit Cash; Credit Revenue
Verified step by step guidance1
Understand the nature of the transaction: John is transferring funds between two accounts he owns, specifically from his savings account to his checking account. This is an internal transfer and does not involve any external party or revenue/expense recognition.
Identify the accounts involved: The two accounts affected are the Checking Account and the Savings Account. Both are asset accounts, and the transfer will increase the balance in the Checking Account while decreasing the balance in the Savings Account.
Determine the accounting rule: In accounting, assets increase with a debit and decrease with a credit. Since the Checking Account balance is increasing, it will be debited. Conversely, since the Savings Account balance is decreasing, it will be credited.
Construct the journal entry: Based on the accounting rule, the journal entry will be: Debit Checking Account (to increase its balance) and Credit Savings Account (to decrease its balance).
Review the options provided: Compare the constructed journal entry with the options given in the problem. The correct option is 'Debit Checking Account; Credit Savings Account,' as it aligns with the accounting treatment for this transaction.
Related Videos
Related Practice
