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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements about recording journal entries is TRUE?

Credits always decrease all types of accounts.

Debits always increase all types of accounts.

Every journal entry must have at least one debit and one credit.

Journal entries are only required for cash transactions.

Previous problemNext problem

Verified step by step guidance

Understand the concept of journal entries: Journal entries are the fundamental building blocks of accounting, used to record financial transactions in the accounting system. Each journal entry must have at least one debit and one credit to maintain the accounting equation (Assets = Liabilities + Equity).

Clarify the role of debits and credits: Debits and credits do not universally increase or decrease all types of accounts. For example, debits increase asset and expense accounts but decrease liability, equity, and revenue accounts. Credits have the opposite effect, increasing liability, equity, and revenue accounts while decreasing asset and expense accounts.

Evaluate the statement 'Credits always decrease all types of accounts': This statement is false because credits increase certain accounts, such as liabilities, equity, and revenue accounts.

Evaluate the statement 'Debits always increase all types of accounts': This statement is false because debits decrease certain accounts, such as liabilities, equity, and revenue accounts.

Assess the statement 'Every journal entry must have at least one debit and one credit': This statement is true because journal entries must follow the double-entry accounting system, ensuring that the total debits equal the total credits for each transaction.