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

A debit to an asset account indicates:

an increase in a liability account

a decrease in an equity account

an increase in the asset account

a decrease in the asset account

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Verified step by step guidance

Understand the basic accounting equation: Assets = Liabilities + Equity. This equation forms the foundation of double-entry accounting.

Recall the rules of debits and credits: Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts.

Focus on the asset account. A debit to an asset account means that the value of the asset is increasing. For example, if cash is received, the cash account (an asset) is debited to reflect the increase.

Eliminate incorrect options: A debit to an asset account does not affect liability or equity accounts directly. Therefore, options like 'an increase in a liability account' or 'a decrease in an equity account' are incorrect.

Conclude that the correct interpretation of a debit to an asset account is 'an increase in the asset account,' as this aligns with the rules of debits and credits in accounting.