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

When John transfers funds online from his savings account to his checking account, what is the correct journal entry to record this transaction?

Debit Checking Account; Credit Savings Account

Debit Savings Account; Credit Checking Account

Debit Expense; Credit Savings Account

Debit Cash; Credit Revenue

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Verified step by step guidance

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.