Understanding Double Entry Accounting

What is the double entry concept?

• An accounting principle that eliminates the need for balance sheets.
• A system that records only cash transactions.
• A method where transactions are recorded only once.
• The double entry concept is an accounting method where every transaction is recorded at least two accounts, maintaining balance in the financial records. In a double-entry system, the amounts recorded as debits must be equal to the amounts recorded as credits.

What is the relationship between accounting equation and double entry rule?

• The accounting equation is maintained through the double entry rule, ensuring that all transactions keep the equation in balance.
• The accounting equation is a guideline, not a requirement for double entry.
• The double entry rule only applies to cash transactions.
• The accounting equation is irrelevant to the double entry rule.

What is an account?

• An account is a physical location for storing money.
• An account is a type of software application.
• An account is a record used to track financial transactions or manage information.
• An account is a document that outlines company policies.

What are the normal balances for assets?

• Debit (+)

• Credit (+)

What are the normal balances for liabilities?

• Debit (+)

• Credit (+)

What are the normal balances for capital?

• Debit (+)

• Credit (+)

What are the normal balances for drawings?

• Debit (+)

• Credit (+)

What are the normal balances for expenses?

• Debit (+)

• Credit (+)

What are the normal balances for revenues?

• Debit (+)

• Credit (+)

What is the effect of Hafidz bringing in cash RM100,000 as capital?

• The effect is an increase in o/equity and asset

• The effect is a reduction in the company's assets. and 0/equity

• The effect is an increase in personal expenses.
• The effect is a decrease in the company's debt.