Basics of Financial Accounting

Which of the following best defines the double-entry system in accounting?

• A system that tracks revenue and expenses.

• A system that records financial transactions in two separate accounts.

• A system that calculates the balance sheet equation.

• 1.     A system that reconciles bank statements with accounting records.

According to the double-entry system, for every debit entry, there must be a corresponding

• Debit entry

• Credit entry

• Asset entry

• Liability entry

In the double-entry system, which account type is debited when recording an increase in assets

• Revenue accounts

• Expense accounts

• Liability account s

• Asset accounts

Which financial statement is prepared using the balance sheet equation?

• Income statement

• Balance Sheet Staement

• Cash Flow Statement

• Retained Earnings Statement

Which financial statement is directly affected by the balance sheet equation?

• Income statement

• Cashflow statement

• Statement of Retained Earninigs

• Balance Sheet statement

If you bought some fruits for $20 from fruit store. is the $20 is

• expense for you?

• is revenue for you?

• expense for the store?

• none of the above

You intended to buy a new clothes next week for $30? Is this amount is

• an expense for you now?

• it considered a decrease in your income now"

• considered a revenue for the store you intended to buy from

• not considered an an accounting transaction