3 - Review Game

Arjun and Zoe started a cafe together. To manage their finances, they use the double-entry system. What is the fundamental principle behind this system?

• Every transaction affects only one account.

• Every transaction affects two or more accounts.

• Every transaction must have a debit entry only.

• Every transaction must have a credit entry only.

Imagine Liam has a business and he purchases a new computer for the office. In the double-entry system, if he debits the computer asset account, what happens to the asset?

• The asset decreases.

• The asset increases.

• The asset remains unchanged.

• The asset is transferred to a liability.

Evelyn has started a small bakery. To understand her business's financial health, she needs to know the correct representation of the accounting equation. Which of the following is correct?

• Assets = Liabilities + Owner's Equity

• Assets + Liabilities = Owner's Equity

• Assets - Liabilities = Owner's Equity

• Liabilities = Assets + Owner's Equity

When Abigail and Henry are recording transactions for their startup, which of the following is true about the debit and credit amounts in their journal entry?

• The debit amount must always be greater than the credit amount.

• The credit amount must always be greater than the debit amount.

• The total debit amount must equal the total credit amount.

• There is no relationship between the debit and credit amounts.

When Mason's Bakery records a sale of $500, what does it mean to credit the Sales account?

• Increase in assets

• Decrease in assets

• Increase in owner's equity

• Decrease in owner's equity

When Anika's boutique sells dresses on credit, which accounts are affected?

• Debit Cash; Credit Sales Revenue

• Debit Accounts Receivable; Credit Sales Revenue

• Debit Sales Revenue; Credit Cash

• Debit Sales Revenue; Credit Accounts Receivable

When Avery's company debits the Accounts Payable account, what is the effect?

• Increase in liabilities

• Decrease in liabilities

• Increase in assets

• Decrease in assets

James runs a stationery store. Which of the following transactions would require a debit to the Supplies account?

• Selling supplies for cash

• Buying supplies on credit

• Paying off supplies purchased on credit

• Returning supplies to the supplier

Henry just paid this month's rent for his apartment. How should this transaction be recorded in his accounting books?

• Debit Rent Expense; Credit Cash

• Debit Cash; Credit Rent Expense

• Debit Rent Expense; Credit Accounts Payable

• Debit Accounts Payable; Credit Rent Expense

When Oliver's Cafe purchases a new espresso machine for cash, how is this transaction recorded?

• Debit Espresso Machine; Credit Cash

• Debit Cash; Credit Espresso Machine

• Debit Espresso Machine; Credit Accounts Payable

• Debit Accounts Payable; Credit Espresso Machine