Bookkeeping Basics

Explain the concept of debits and credits in bookkeeping.

• Debits and credits are used to record weather patterns in bookkeeping.

• Debits and credits are used to record inventory levels in bookkeeping.

• Debits and credits are used to record personal information in bookkeeping.

• Debits and credits are used to record financial transactions in bookkeeping.

What are the two accounts affected in every transaction in double-entry accounting?

• Debited account and Credited account

• Credited account and Debited account

• Income account and Expense account

• Asset account and Liability account

Define the terms 'assets' and 'liabilities' in the context of bookkeeping.

• Assets are intangible, while liabilities are tangible.

• Assets are liabilities, while liabilities are assets.

• Assets are expenses, while liabilities are revenues.

• Assets are resources owned by a company, while liabilities are obligations or debts.

Describe the process of journalizing transactions in bookkeeping.

• Journalizing transactions involves only recording cash transactions

• Journalizing transactions involves recording transactions in any order

• The process of journalizing transactions in bookkeeping involves recording the financial effects of business transactions in a chronological order in the general journal.

• Journalizing transactions involves summarizing transactions in the general ledger

Explain the difference between a balance sheet and an income statement.

• A balance sheet is used for tax purposes, while an income statement is used for budgeting.

• A balance sheet shows financial position at a point in time, while an income statement shows financial performance over a period of time.

• A balance sheet includes revenue and expenses, while an income statement includes assets and liabilities.

• A balance sheet shows future financial projections, while an income statement shows historical financial data.