Understanding Accounting Transactions

What are the two main types of accounting transactions?

• Revenue transactions and expense transactions

• Equity transactions and liability transactions

• Cash transactions and credit transactions

• Debit transactions and credit transactions

Give an example of a cash transaction in accounting.

• Customer receives $50 in cash as a refund for a meal.

• Customer pays $50 using a credit card for a meal at a restaurant.

• Customer pays $50 in cash for a meal at a grocery store.

• Customer pays $50 in cash for a meal at a restaurant.

What is the purpose of a journal entry in accounting?

• To prepare tax returns.

• To summarize financial statements.

• The purpose of a journal entry in accounting is to systematically record financial transactions.

• To analyze market trends.

How would you record a sale of goods on credit?

• Debit Cash, Credit Sales Revenue

• Debit Inventory, Credit Accounts Receivable

• Debit Accounts Receivable, Credit Sales Revenue

• Debit Sales Revenue, Credit Accounts Payable

What is the difference between a debit and a credit?

• A debit decreases assets/expenses and increases liabilities/equity; a credit increases assets/expenses and decreases liabilities/equity.

• A debit and a credit have no impact on financial statements.

• A debit increases assets/expenses and decreases liabilities/equity; a credit decreases assets/expenses and increases liabilities/equity.

• A debit is used for income and a credit is used for expenses.

Provide an example of a journal entry for paying rent.

• Debit Cash $1,000; Credit Rent Expense $1,000

• Debit Rent Income $1,000; Credit Cash $1,000

• Debit Rent Expense $500; Credit Cash $500

• Debit Rent Expense $1,000; Credit Cash $1,000

What type of account is affected when a company receives cash from a customer?

• Cash account

• Sales Revenue Account

• Inventory Account

• Accounts Receivable

How do you record the purchase of equipment in a journal entry?

• Debit Equipment account and credit Inventory account.

• Debit Cash account and credit Equipment account.

• Debit Accounts Receivable account and credit Equipment account.

• Debit Equipment account and credit Cash or Accounts Payable account.

What is the significance of the date in a journal entry?

• The date is used to categorize journal entries by theme.

• The date only indicates the author's mood.

• The date is irrelevant to the content of the journal.

• The date signifies the timing of events and thoughts recorded in the journal.

Explain how to record a loan taken by the business in the journal.

• Debit Cash account and credit Loan Payable account.

• Debit Cash account and credit Accounts Receivable account.

• Debit Interest Expense account and credit Cash account.

• Debit Loan Payable account and credit Cash account.