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Questions and Answers
Which side of the accounting equation do assets belong to?
Which side of the accounting equation do assets belong to?
In double-entry bookkeeping, which account type increases with a debit entry?
In double-entry bookkeeping, which account type increases with a debit entry?
If a business issues an official receipt, which account is most likely to be affected?
If a business issues an official receipt, which account is most likely to be affected?
Which document is used to evidence a sale where goods are sold on credit?
Which document is used to evidence a sale where goods are sold on credit?
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When a business records an increase in equity, which side is affected and how?
When a business records an increase in equity, which side is affected and how?
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Which type of account is contra to an asset account?
Which type of account is contra to an asset account?
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In double-entry bookkeeping, where is the account to be debited typically entered?
In double-entry bookkeeping, where is the account to be debited typically entered?
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When preparing journal vouchers for year-end adjustments, what type of transactions are they usually associated with?
When preparing journal vouchers for year-end adjustments, what type of transactions are they usually associated with?
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What is the purpose of a posting reference (P.R.) column in a ledger?
What is the purpose of a posting reference (P.R.) column in a ledger?
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Where are the debit amounts for each account typically recorded in a ledger?
Where are the debit amounts for each account typically recorded in a ledger?
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When is a Check Voucher typically used?
When is a Check Voucher typically used?
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In bookkeeping, where is the account to be credited usually entered?
In bookkeeping, where is the account to be credited usually entered?
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In double-entry bookkeeping, what is the relationship between debits and credits?
In double-entry bookkeeping, what is the relationship between debits and credits?
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How are increases in income usually recorded in accounting?
How are increases in income usually recorded in accounting?
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Which of the following has a normal credit balance in the accounting system?
Which of the following has a normal credit balance in the accounting system?
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What is the purpose of contra accounts in accounting?
What is the purpose of contra accounts in accounting?
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When recording an expense, which entry is made according to the rules of debit and credit?
When recording an expense, which entry is made according to the rules of debit and credit?
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What is the fundamental principle behind double-entry bookkeeping?
What is the fundamental principle behind double-entry bookkeeping?
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Study Notes
Accounting Equation and Assets
- Assets belong to the left side of the accounting equation: Assets = Liabilities + Equity.
Double-Entry Bookkeeping
- An account type that increases with a debit entry includes asset and expense accounts.
- The account most likely affected when a business issues an official receipt is the cash or accounts receivable account.
Sales Transactions
- A sale where goods are sold on credit is evidenced by an invoice.
Equity and Accounting Entries
- Increasing equity affects the right side of the accounting equation, typically through credit entries in the equity account.
- The account that is contra to an asset account is the accumulated depreciation account.
Journal Entries and Adjustments
- In double-entry bookkeeping, the account to be debited is usually entered in the left column of the journal entries.
- Year-end adjustments in journal vouchers are usually associated with accruals and deferrals.
Posting and Ledger Management
- The purpose of a posting reference (P.R.) column in a ledger is to facilitate tracking and linking transactions between journals and ledgers.
- Debit amounts for each account are typically recorded in the left column of the ledger.
Check Vouchers and Transactions
- A Check Voucher is typically used for payment transactions, including payroll, suppliers, and other expenses.
- In bookkeeping, the account to be credited is usually entered in the right column of the journal entries.
Relationship of Debits and Credits
- In double-entry bookkeeping, debits and credits must always balance, maintaining the equation's integrity.
- Increases in income are usually recorded with credit entries.
Credit Balances and Contra Accounts
- Accounts that have a normal credit balance include liabilities, equity, and revenue accounts.
- The purpose of contra accounts in accounting is to reduce the balance of related accounts, such as accumulated depreciation reducing the value of fixed assets.
Expense Recording
- When recording an expense, a debit entry is made to the expense account, and a credit entry is made to the cash or accounts payable account according to the rules of debit and credit.
Fundamental Principle of Bookkeeping
- The fundamental principle behind double-entry bookkeeping is that every transaction affects at least two accounts, ensuring the accounting equation remains in balance.
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Description
Test your knowledge of accounting source documents and their corresponding account entries with this quiz. Identify which type of document is associated with each transaction and whether it results in an increase or decrease in specific accounts.
