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 correctly describes the journal entry to record the acquisition of a fixed asset paid by check?

Debit Fixed Asset account; Credit Accounts Payable account

Debit Expense account; Credit Cash account

Debit Fixed Asset account; Credit Cash account

Debit Cash account; Credit Fixed Asset account

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Verified step by step guidance

Understand the nature of the transaction: The acquisition of a fixed asset involves purchasing a long-term asset for the business, which is paid for using cash (via check). This means the Fixed Asset account increases, and the Cash account decreases.

Recall the rules of debits and credits: An increase in an asset account (e.g., Fixed Asset) is recorded as a debit, while a decrease in an asset account (e.g., Cash) is recorded as a credit.

Identify the accounts involved: The two accounts affected are the Fixed Asset account (which increases) and the Cash account (which decreases).

Determine the journal entry: To record the acquisition, you would debit the Fixed Asset account to reflect the increase in assets and credit the Cash account to reflect the decrease in cash.

Write the journal entry: The journal entry would be formatted as follows: Debit Fixed Asset account; Credit Cash account. This correctly reflects the transaction in the accounting records.