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Questions and Answers
Which of the following best describes double-entry bookkeeping?
What are the two equal and corresponding sides in the double-entry system called?
How many accounts does a transaction in double-entry bookkeeping always affect?
What is the purpose of double-entry bookkeeping?
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If a business takes out a bank loan for $10,000, which accounts will be affected?
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Study Notes
Double-Entry Bookkeeping
- Double-entry bookkeeping is an accounting system where each transaction is recorded twice, once as a debit and once as a credit.
Characteristics of Double-Entry System
- The two equal and corresponding sides in the double-entry system are called Debits and Credits.
- A transaction in double-entry bookkeeping always affects at least two accounts.
Purpose of Double-Entry Bookkeeping
- The purpose of double-entry bookkeeping is to ensure accuracy, completeness, and consistency of financial records.
Example: Bank Loan Transaction
- If a business takes out a bank loan for $10,000, the accounts affected would be:
- Cash (or Bank) account (increased by $10,000)
- Loan Payable account (increased by $10,000)
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Description
Test your knowledge of double-entry bookkeeping with this quiz! Explore the key principles and concepts behind this method of accounting, including debits, credits, and balancing financial transactions. Challenge yourself to understand how each entry affects different accounts in this essential system of bookkeeping.
