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

How are sales transactions typically recorded in the journal using debits and credits?

Debit Accounts Receivable or Cash; Credit Sales Revenue

Debit Inventory; Credit Sales Revenue

Debit Sales Revenue; Credit Accounts Receivable or Cash

Debit Sales Revenue; Credit Inventory

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Verified step by step guidance

Understand the nature of the sales transaction: Sales transactions involve the exchange of goods or services for cash or credit. This impacts multiple accounts, including revenue, inventory, and accounts receivable or cash.

Identify the accounts affected: When a sale is made, revenue is earned, inventory is reduced, and either cash or accounts receivable is increased depending on whether the sale is made on credit or for cash.

Apply the rules of debits and credits: In accounting, debits increase asset accounts (e.g., Accounts Receivable or Cash) and decrease liability or equity accounts. Credits increase revenue accounts (e.g., Sales Revenue) and decrease asset accounts (e.g., Inventory).

Record the revenue side of the transaction: Debit Accounts Receivable or Cash to reflect the increase in assets, and Credit Sales Revenue to record the earned revenue.

Record the inventory side of the transaction: Debit Inventory to reflect the reduction in goods sold, and Credit Cost of Goods Sold (COGS) to account for the expense associated with the sale.