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Mr. Russo exchanged €200 for U.S. dollars to deposit into his company's bank account. Which of the following is the correct journal entry to record this transaction in the company's accounting records?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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In the context of journal entries, when an employer pays salaries to employees, which of the following accounts is debited?
A
Service Revenue
B
Salaries Payable
C
Salaries Expense
D
Cash
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Understand the nature of the transaction: When an employer pays salaries to employees, it represents an expense incurred by the business for the services provided by the employees. Expenses are recorded as debits in accounting.
Identify the correct account to debit: Salaries Expense is the account that reflects the cost of salaries paid to employees. This account is debited to increase the expense, as expenses reduce the equity of the business.
Determine the account to credit: Since the payment is made in cash, the Cash account is credited to reflect the reduction in the company's cash balance.
Write the journal entry: The journal entry for this transaction would involve debiting the Salaries Expense account and crediting the Cash account. This ensures that the accounting equation remains balanced.
Review the options provided: Among the options listed (Service Revenue, Salaries Payable, Salaries Expense, Cash), Salaries Expense is the correct account to debit because it represents the expense incurred for paying salaries.
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