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Questions and Answers
When is an account considered to be Debit according to the rules discussed?
When is an account considered to be Debit according to the rules discussed?
- When the account has future responsibilities
- When the account is created or purchased
- When the account provides a benefit
- When the account obtains a benefit (correct)
What is the basis for considering an account as Credit?
What is the basis for considering an account as Credit?
- When the account is created or purchased
- When the account obtains a benefit
- When the business has a responsibility to return a benefit in future (correct)
- When the account provides a benefit
How is an asset treated when it is created or purchased?
How is an asset treated when it is created or purchased?
- It is Credited
- It is Debited (correct)
- It has future responsibilities
- It obtains a benefit
What happens to an account that provides benefit to the business?
What happens to an account that provides benefit to the business?
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How are the rules for Debit and Credit related to the creation or purchase of an asset?
How are the rules for Debit and Credit related to the creation or purchase of an asset?
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Study Notes
Accounting Rules
- An account is considered Debit when there is a decrease in a liability or equity account or an increase in an asset account.
- An account is considered Credit when there is an increase in a liability or equity account or a decrease in an asset account.
Asset Treatment
- When an asset is created or purchased, it is treated as a Debit, as it increases the asset account.
Benefit to Business
- An account that provides a benefit to the business is considered a Revenue, which is a Credit account.
Debit and Credit Rules
- The rules for Debit and Credit are related to the creation or purchase of an asset, as an increase in an asset account is a Debit, and a decrease in an asset account is a Credit.
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Description
Test your knowledge of accounting principles with this quiz on the rules of debit and credit. Sharpen your understanding of which accounts are debited and credited in various transactions and how they impact the financial health of a business.
