Bookkeeping Basics: Transactions and Principles

What is the main purpose of bookkeeping?

• To prepare financial statements

• To record financial transactions

• To audit financial records

• To manage payroll

In double-entry bookkeeping, how many accounts are affected per transaction?

• One

• Two

• Three

• Four

What is the accounting equation?

• Assets = Liabilities + Capital

• Revenue = Expenses + Profit

• Assets = Liabilities - Capital

• Revenue = Liabilities + Equity

If a business purchases office supplies for cash, which accounts are affected?

• Office Supplies and Cash

• Office Supplies and Accounts Payable

• Cash and Accounts Receivable

• Accounts Payable and Accounts Receivable

In a double-entry system, what does a debit entry do to an asset account?

• It increases the account

• It decreases the account

• It has no effect

• It transfers the balance

Which transaction requires a credit entry to the cash account?

• Receiving a loan

• Paying a supplier

• Receiving payment from a customer

• Selling an asset

What is the purpose of a trial balance in bookkeeping?

• To make payment to suppliers

• To ensure that debits equal credits

• To record invoices into the accounting system

• To prepare tax returns

When a business makes sales, which account is credited?

• Expense

• Asset

• Liability

• Revenue

If a company makes a payment against a loan, which accounts are affected?

• Bank and Bank Loan

• Cash and Revenue

• Bank Loan and Revenue

• Cash and Accounts Receivable

What is the effect of a credit entry on a liability account?

• It increases the account

• It decreases the account

• It has no effect

• It transfers the balance