When an accountant records journal entries for a business, he records these entries as debits and credits, and they must balance. Here are a couple of practice questions to help you hone your journal entry — and balancing — skills.

Practice questions

  1. What is the journal entry to record a collection of $2,000 of outstanding accounts receivables?

  2. A company recorded a debit to an asset account for $1,000 and a credit to a liability account for $200. What else should be recorded to complete the journal entry?

Answers and explanations

  1. A debit to an asset account for $2,000 and a credit to another asset account for $2,000

    Collection of outstanding receivables increases cash by $2,000 and decreases accounts receivable by $2,000. Therefore, an asset account (cash) should be debited (increased) $2,000, and another asset account (accounts receivable) should be credited (decreased) $2,000.

  2. Credit to another account for $800

    The company has a debit of $1,000 and a credit of $200, so the entry doesn't balance. If you take the debit of $1,000 less the credit of $200, you can see the entry is off by a credit of $800. To make the entry balance, the company needs to record another credit of $800 and such a credit could be recorded to another account. The account could be a balance sheet or income statement account.

If you need more practice on this and other topics from your accounting course, visit Dummies.com to purchase Accounting For Dummies! Featuring the latest information on accounting methods and standards, the information in Accounting For Dummies is valuable for anyone studying or working in the fields of accounting or finance.

About This Article

This article is from the book:

About the book authors:

Kenneth Boyd is the owner of St. Louis Test Preparation (www.stltest.net). He provides online tutoring in accounting and finance. Kenneth has worked as a CPA, Auditor, Tax Preparer, and College Professor. He is the author of CPA Exam For Dummies. Kate Mooney has been teaching accounting to both undergraduates and MBA students at St. Cloud State University since 1986, after earning her PhD from Texas A & M University. She is a licensed CPA in Minnesota and is a member of the State Board of Accountancy.

This article can be found in the category: