Double-Entry Bookkeeping Quiz

Double-Entry Bookkeeping:

• Double-entry bookkeeping is a method of bookkeeping that relies 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 sides known as debit and credit.
• A transaction in double-entry bookkeeping always affects at least two accounts, 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 bookkeeping is to allow the detection of financial errors and fraud.
• The earliest extant accounting records that follow the modern double-entry system in Europe come from Amatino Manucci, a Florentine merchant at the end of the 13th century.
• Luca Pacioli, a Franciscan friar and collaborator of Leonardo da Vinci, first codified the system in his mathematics textbook Summa de arithmetica, geometria, proportioni et proportionalità published in Venice in 1494.
• In the double-entry accounting system, at least two accounting entries are required to record each financial transaction.
• There are two different ways to record the effects of debits and credits on accounts in the double-entry system of bookkeeping. They are the Traditional Approach and the Accounting Equation Approach.
• Each financial transaction is recorded in at least two different nominal ledger accounts within the financial accounting system, so that the total debits equals the total credits in the general ledger, i.e. the accounts balance.
• The double entry system uses nominal ledger accounts. From these nominal ledger accounts, a trial balance can be created.