Multiple Choice
Anaya receives a bank statement showing a deposit of \$1,000 into her business account. Which journal entry should she record to reflect this transaction?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
In the debit and credit framework, expenses follow the same debit and credit rules as which type of account?
A
Revenues
B
Assets
C
Liabilities
D
Common stock (equity)
Verified step by step guidance1
Understand the basic accounting equation: \(\text{Assets} = \text{Liabilities} + \text{Equity}\). This equation forms the foundation of double-entry accounting.
Recall that expenses are increases in costs that reduce equity, and they behave similarly to asset accounts in terms of debit and credit rules.
Know the debit and credit rules: Assets and expenses increase with debits and decrease with credits, while liabilities, equity, and revenues increase with credits and decrease with debits.
Identify that since expenses increase with debits, they follow the same debit and credit rules as asset accounts, which also increase with debits.
Therefore, expenses follow the same debit and credit rules as assets, not revenues, liabilities, or common stock (equity).
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