Accounting Quiz

How many accounts are to be recorded by a business transaction with a double-entry accounting?

• At least 3

• At least 4

• At least 6

• At least 2

Mary ordered a bicycle from Fit Company Ltd and was asked to make a deposit. One month later, when the bicycle was delivered to Mary, she paid an amount of $1200 which was due to Fit Company Ltd. Which of the following is correct if Fit Company Ltd uses a double-entry accounting system?

• Since the amount was paid out of office, it cannot be recorded into the ledger.

• For this transaction, only one entry of $1200 was added to the account balance.

• Mary bought the bicycle for $1500.

• The credit, which is $1200.00, will go to the accounts receivable.

Why are debits and credits used in accounting?

• Decrease net income

• Maintain balance

• Increase total revenue

• Report where money is spent

How is a debit different from a credit?

• A debit decreases asset while a credit decreases liability.

• A debit decreases prepared expense balances while credit increases prepaid expense accounts.

• A debit is on the right side of the ledger while credit is on the left side of the ledger.

• A debit decreases liability and equity account balances while a credit increases liability and owner's equity accounts.

The visuals that are used to help accounting professionals see the effects of transactions on accounts are called _____.

1. 
   

• Debits

• T-accounts

• Credits

• Journals