Double Entry Bookkeeping Test: Quiz and Flashcards

Double-entry bookkeeping is based on a two-sided accounting entry to maintain financial information

Every entry to an account requires a corresponding and opposite entry to a different account

The double-entry system has two equal and corresponding ______ known as debit and credit

A transaction in double-entry bookkeeping always affects at least two ______, always includes at least one debit and one credit, and always has total debits and total credits that are equal

The purpose of double-entry ______ is to allow the detection of financial errors and fraud

Double-Entry Bookkeeping

Double-entry bookkeeping is a method of bookkeeping that uses a two-sided accounting entry to maintain financial information.
Every entry to an account requires a corresponding and opposite entry to a different account.
The double-entry system has two equal and corresponding sides known as debit and credit.

Characteristics of Double-Entry Bookkeeping

A transaction in double-entry bookkeeping always affects at least two accounts.
Each transaction includes at least one debit and one credit.
The total debits and total credits in a transaction are always equal.

Purpose of Double-Entry Bookkeeping

The purpose of double-entry bookkeeping is to allow the detection of financial errors and fraud.

Example of Double-Entry Bookkeeping

If a business takes out a bank loan for $10,000, the transaction would require:
- A debit of $10,000 to an asset account called "Cash".
- A credit of $10,000 to a liability account called "Loan Payable".
The basic entry to record this transaction in a general ledger would show the debit and credit sides of the transaction.

Test your knowledge of double-entry bookkeeping with this quiz. Challenge yourself with questions about debit, credit, and the fundamental principles of this accounting method.