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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

The journal entry to record the purchase of materials on account is a(n):

Debit to Materials and credit to Accounts Payable

Debit to Materials and credit to Cash

Debit to Accounts Payable and credit to Materials

Debit to Cash and credit to Materials

Previous problemNext problem

Verified step by step guidance

Understand the nature of the transaction: The purchase of materials on account means the company is acquiring materials but has not yet paid for them. This creates a liability (Accounts Payable).

Identify the accounts involved: The Materials account represents the inventory or supplies being purchased, and the Accounts Payable account represents the obligation to pay for these materials in the future.

Determine the type of account for each: Materials is an asset account, and Accounts Payable is a liability account. Purchasing materials increases the asset, while the obligation increases the liability.

Apply the rules of debits and credits: Assets increase with a debit, so Materials will be debited. Liabilities increase with a credit, so Accounts Payable will be credited.

Construct the journal entry: Debit the Materials account to reflect the increase in inventory, and credit the Accounts Payable account to record the liability created by the purchase on account.