Double-Entry Bookkeeping Quiz

Double-entry bookkeeping = A method of bookkeeping that relies on a two-sided accounting entry to maintain financial information Debit = An entry on the left side of an account Credit = An entry on the right side of an account Asset account = An account that records the value of items owned by a business

Every entry to an account requires a corresponding and opposite entry to a different account = True A transaction in double-entry bookkeeping always affects at least two accounts = True A transaction in double-entry bookkeeping always includes at least one debit and one credit = True The purpose of double-entry bookkeeping is to allow the detection of financial errors and fraud = True

A business takes out a bank loan for $10,000 = Debit: Cash $10,000, Credit: Loan $10,000 A customer pays $500 in cash for a product = Debit: Cash $500, Credit: Sales $500 A business purchases $1,000 worth of office supplies on credit = Debit: Office Supplies $1,000, Credit: Accounts Payable $1,000 A business receives $2,000 for services rendered = Debit: Accounts Receivable $2,000, Credit: Sales $2,000

<p>Debit = An accounting entry that increases an asset or expense account, or decreases a liability or equity account Credit = An accounting entry that decreases an asset or expense account, or increases a liability or equity account Liability account = An account that records debts or obligations of a business Equity account = An account that represents the residual value of assets after deducting liabilities</p> Signup and view all the answers

<p>The double-entry system has two equal and corresponding sides known as debit and credit = True The total debits and total credits in a transaction are always equal = True A transaction in double-entry bookkeeping can affect more than two accounts = True Double-entry bookkeeping is a method that is no longer used in modern accounting = False</p> Signup and view all the answers