5 Questions
Double-entry bookkeeping is based on a two-sided accounting entry to maintain financial information
method
Every entry to an account requires a corresponding and opposite entry to a different account
debit
The double-entry system has two equal and corresponding ______ known as debit and credit
sides
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
accounts
The purpose of double-entry ______ is to allow the detection of financial errors and fraud
bookkeeping
Study Notes
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.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
