Questions: When is a journal entry not required?

When is a journal entry not required?
Transcript text: When is a journal entry not required?
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Solution

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The answer is: The total equity is unchanged.

Explanation
Option 1: The total equity is decreased.

When the total equity is decreased, a journal entry is required to record the transaction that caused the decrease. This could be due to expenses, dividends, or losses.

Option 2: The total equity is unchanged.

A journal entry is not required when the total equity is unchanged because there is no financial impact on the equity of the business. This could occur in situations where there is an internal transfer between accounts that does not affect the overall equity.

Option 3: The transaction occurs on the weekend.

The timing of the transaction (whether it occurs on a weekend or a weekday) does not determine whether a journal entry is required. What matters is the financial impact of the transaction.

Option 4: The total equity is increased.

When the total equity is increased, a journal entry is required to record the transaction that caused the increase. This could be due to revenues, investments, or gains.

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