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

When a company receives \$10,000 in cash from a customer, which of the following is the correct journal entry?

Debit Cash \$10,000; Credit Revenue \$10,000

Debit Cash \$10,000; Credit Accounts Payable \$10,000

Debit Accounts Receivable \$10,000; Credit Cash \$10,000

Debit Revenue \$10,000; Credit Cash \$10,000

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Verified step by step guidance

Step 1: Understand the nature of the transaction. The company is receiving $10,000 in cash from a customer, which indicates an inflow of cash. This is typically associated with revenue earned from providing goods or services.

Step 2: Recall the basic accounting principle of double-entry bookkeeping. Every transaction affects at least two accounts, and the total debits must equal the total credits.

Step 3: Identify the accounts involved. Since cash is received, the 'Cash' account will be debited (increased). The corresponding credit will be made to the 'Revenue' account, as the cash received represents income earned.

Step 4: Write the journal entry. Debit the 'Cash' account for $10,000 to reflect the increase in cash. Credit the 'Revenue' account for $10,000 to record the income earned.

Step 5: Eliminate incorrect options. The other options involve accounts such as 'Accounts Payable' or 'Accounts Receivable,' which are not relevant to this transaction. The correct journal entry is: Debit Cash $10,000; Credit Revenue $10,000.