Double Entry Accounting Quiz

What is the accounting equation in double-entry accounting?

• Assets - Liabilities = Equity

• Assets + Liabilities = Equity

• Assets = Liabilities - Equity

• Assets = Liabilities + Equity

In double-entry accounting, how many accounts must be involved in a journal entry?

• At least 4 accounts

• At least 3 accounts

• At least 2 accounts

• At least 1 account

What does a debit entry in an asset account do?

• Decreases the asset balance

• Transfers the asset balance

• Increases the asset balance

• Has no effect on the asset balance

In double-entry accounting, what must equal for every transaction?

• Total assets and total liabilities

• Total cash and total equity

• Total debits and total credits

• Total expenses and total revenues

What happens when cash is decreased in double-entry accounting?

• Both a debit and credit entry are made

• No entry is needed

• A credit entry is made

• A debit entry is made

Which transactions recorded as credit entry in journal?

• Decreases the liability balance

• Increases the liability balance

• Decreases the asset balance

• Increases the asset balance

What is the primary purpose of double-entry accounting?

• To ensure accuracy and detect errors

• To reduce the number of accounts

• To simplify bookkeeping

• To eliminate the need for journal entries

In double-entry accounting, every financial transaction affects only one account.

• True

• False

What is the effect of a credit entry on an expense account?

• Increases the expense balance

• Decreases the expense balance

• Has no effect on the expense balance

• Transfers the expense balance

Double-entry book-keeping is so called because all transactions are recorded twice in the same account.

• True

• False