Each question will challenge your understanding of accounting principles and the correct recording methods for different business activities. Received $150,000 cash from investors for ownership in the company.b. Purchased inventory to be sold to customers, $45,000 on account.c. Rented warehouse space, $6,000 was paid for this month.d. Sold $5,000 of inventory on account (you have not been paid yet), sales price of $7,500.e. Acquired office furniture for $3,000 cashf.

What will be the end balance in the accounts receivable account for Sorrel Co. after transactions during January?

C. Making a payment is a decrease to cash and a decrease to an asset is recorded with a debit (not one of the choices). Paying amounts owed is a decrease to a liability which is recorded with a debit. Amounts owed to suppliers is accounts payable. B. Increases in expenses are recorded with a debit.

Journal Entry for Cash Income

And right at the bottom of the page, you can find more questions on the topic submitted by fellow students. C. Journal entries are written with the debit on the top and the credit on the bottom slightly indented. All amounts are written beside the account name with a positive number. Receive instant access to our entire collection of premium materials, including our 1,800+ test questions.

• In this transaction the business spends money in order to obtain an asset.
• Acquired office furniture for $3,000 cashf.
• If you wish to take an accounting quiz please do so by first choosing a quiz from the Popular Quiz list below.

Which journal entry will VC Consulting make for Victor Cruz’s contribution of $78,000 in cash and $146,000 in land?

Borrowing is an increase to notes payable which is recorded with a credit. Receiving cash is an increase to an asset which is recorded with a debit. Each journal medical expenses retirees and others can deduct on their taxes entry must have at least one debit and one credit. A. Amounts owed from the customer is accounts receivable. The customer pays cash to the company.

One could thus follow information from the journal entry to an account in the ledger, or vice versa. A recording in one of the journals is called a journal entry. Of course, these days bookkeepers enter transactions in an accounting program on the computer. So these books of first entry are now just in digital form.

Journal Entry for the Owner Investing Capital

B. Cost of goods sold is the account that is used to show that inventory is used to provide goods to the customer. Using inventory is recorded as the credit (decreasing) and cost of goods sold is recorded with a debit (expense increasing). If you need a refresher course on accounting journal entries you can view our basics of bookkeeping tutorials here. B. Expense accounts are debited when they increase. A service provided to the company this period is an increase in to the expense this period.

Supplies that are on hand (unused) at the balance sheet date are reported in the current asset account Supplies or Supplies on Hand. B. Accumulated depreciation is the account that is always credited when recording depreciation expense. This account is the total of all prior years’ depreciation expense.

It contains 20 practice questions and answers. You can download it here if you want to test yourself. Additionally, if this information is helpful, you might consider signing up for my monthly subscription. Read the transaction and record to cash first if cash is affected. This will help you to identify the other account used. Check your understanding of this lesson by taking the quiz in the Test Yourself!

B. A debit to investments is an increase in investments. A credit to cash is a decrease in cash. If you wish to take an accounting quiz please do so by first choosing a quiz from the Popular Quiz list below. Note that there is no time limit to answer the questions, and you can have as many goes at answering each question as you like. The purpose of journal entries is to keep a day-to-day, chronological record of a business and its transactions.

Test your knowledge of double entry bookkeeping with our accounting journal and ledger quiz. A current asset representing the cost of supplies on hand at a point in time. The account is usually listed on the balance sheet after the Inventory account. The amount of insurance that was incurred/used up/expired during the period of time appearing in the heading of the income statement. The amount of insurance premiums that have not yet expired should be reported in the current asset account Prepaid Insurance.

These quizzes are a great way to practice accounting. Answering these questions efficiently will prepare you for your tests and quizzes. Click the orange text below the quiz to view the answers. Watch the video below each practice quiz to see further explanation on how to solve these accounting practice questions.