Accounting Equation and Double Entry System Quiz

What is the fundamental accounting equation?

• ASSETS = LIABILITIES + OWNERS' EQUITY

• ASSETS + LIABILITIES = OWNERS' EQUITY

• LIABILITIES = ASSETS - OWNERS' EQUITY

• OWNERS' EQUITY = ASSETS + LIABILITIES

In a T-account, which side represents a debit?

• Left side

• Right side

• Top side

• Bottom side

What is the normal balance of Assets?

• Credit

• Debit

• Neutral effect

• Decreases it

Which of the following accounts typically has a credit balance?

• Assets

• Expenses

• Liabilities

• Dividends

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

• Transfers it

• Increases it

• Decreases it

• No effect

Which of the following is NOT a component of the basic accounting equation?

• Assets

• Owners' Equity

• Expenses

• Liabilities

If an expense account is increased, what is the effect on capital?

• Transfers capital

• Increases capital

• No effect on capital

• Decreases capital

What is the normal balance for an expense account?

• Debit

• Credit

• Neutral

• None

In the expanded accounting equation, what does 'E' stand for?

• Earnings

• Expenses

• Equity

• Earnings Before Interest

Which of the following is a synonym for debit?

• Decrease

• Increase

• Left

• Right