Accounting Chapter 2 - Double-Entry System

Questions and Answers

What does the Double-Entry Accounting System require?

Every transaction to be recorded in at least one account

Transactions are recorded in a single account

Total debits to be equal to total credits (correct)

Only cash transactions to be recorded

What are the Rules of Debit and Credit?

Specific rules for recording debits and credits based on the type of account.

What determines the normal balance of an account?

The transaction date

The type of account (correct)

Only credit entries

Only debit entries

What is a Record in accounting?

The initial record in which the effects of transactions are recorded. Signup and view all the answers

What does Journalizing refer to?

The process of recording a transaction in the journal. Signup and view all the answers

What is a Journal Entry?

The form of recording a transaction in the journal. Signup and view all the answers

Study Notes

Double-Entry Accounting System

Each business transaction is recorded in a minimum of two accounts.
Total debits must equal total credits, maintaining balance in the accounting equation.

Rules of Debit and Credit

Debits and credits are recorded based on the type of account involved.
Specific rules dictate whether an increase or decrease in an account is recorded as a debit or a credit.

Normal Balance of an Account

Accounts may have a normal balance that is either debit or credit.
The classification depends on whether increases are recorded as debits or credits, influencing account management.

Record

A record is the foundational documentation for transactions.
It captures the effects of business activities systematically.

Journalizing

The process of journalizing involves systematically recording transactions.
This ensures that each transaction is documented accurately within the journal.

Journal Entry

A journal entry is the formal method used to log a transaction.
It details the accounts affected, the amounts, and the date of the transaction for clarity.

Description

Explore the fundamentals of the Double-Entry Accounting System through these flashcards. Understand key concepts such as the rules of debit and credit that govern this essential accounting method. Perfect for students looking to strengthen their accounting skills.