Multiple Choice
On July 1, a company receives an invoice for \$2,000 for office supplies purchased on account. Which of the following is the correct journal entry to record this transaction?
116
views
2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
When recording an expense in a financial ledger, it is entered as a _____.
A
savings
B
balance
C
credit
D
debit
Verified step by step guidance1
Understand the basic accounting principle: Expenses are recorded as debits because they decrease equity and increase the total expenses in the financial ledger.
Recall the structure of a financial ledger: It consists of two sides—debits on the left and credits on the right.
Recognize that expenses reduce the net income, which is part of equity. In accounting, reductions in equity are recorded as debits.
When recording an expense, identify the account affected (e.g., Rent Expense, Utilities Expense) and enter the amount on the debit side of the ledger.
Ensure that the corresponding credit entry is made to the appropriate account, such as Cash or Accounts Payable, to maintain the balance in the accounting equation: Assets = Liabilities + Equity.
Related Videos
Related Practice
