Multiple Choice
Which of the following forms can be used to record a payment made at the time of purchase by check?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Under which of the following circumstances would Cash be credited and Equipment be debited in a journal entry?
A
When cash is received from a customer for services rendered.
B
When equipment is sold for cash.
C
When equipment is purchased by paying cash.
D
When equipment is donated to the company.
Verified step by step guidance1
Understand the basic accounting principle: In a journal entry, debits and credits must balance, and they represent changes in accounts. Debits typically increase asset accounts, while credits decrease them.
Analyze the transaction: The problem states that equipment is purchased by paying cash. This means the company is acquiring an asset (equipment) and reducing another asset (cash).
Determine the accounts involved: The two accounts affected are 'Equipment' (an asset account) and 'Cash' (another asset account).
Apply the journal entry rules: Since equipment is being acquired, it is debited to increase its balance. Cash is being paid, so it is credited to decrease its balance.
Write the journal entry: Debit the 'Equipment' account and credit the 'Cash' account to reflect the purchase transaction.
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