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

Which of the following is the primary purpose of using journal entries in financial accounting?

To prepare the annual financial statements directly

To calculate the company’s net income for the period

To record and document all of a business’s recurring and routine transactions

To determine the market value of company assets

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Verified step by step guidance

Understand the concept of journal entries: Journal entries are the foundational records in financial accounting used to document all financial transactions systematically.

Recognize the purpose of journal entries: The primary purpose is to record and document all of a business’s recurring and routine transactions, ensuring accuracy and compliance with accounting standards.

Clarify why journal entries are not used directly for financial statements: Journal entries are first posted to the ledger accounts, which are then used to prepare trial balances and ultimately financial statements.

Explain why journal entries are not used to calculate net income: Net income is derived from the income statement, which aggregates revenues and expenses from ledger accounts, not directly from journal entries.

Highlight why journal entries do not determine market value of assets: Market value is determined through valuation methods, not through journal entries, which focus on historical cost and transaction documentation.