Understanding Accounts, Debits, and Credits

What is an account in accounting?

• A financial statement

• A record of specific asset, liability, or equity transactions

• A record of all company profits

• A form of financial control

Which of the following is NOT part of an account?

• Title

• Debit side

• Credit side

• Owner’s name

In accounting, a debit to an asset account is recorded:

• On the right or credit side

• On the left or debit side

• As an increase to the account

• As a decrease to the account

Which of the following is true about debits and credits?

• Debits always increase asset accounts

• Credits increase asset accounts

• Debits decrease liability accounts

• Credits decrease liability accounts

When a company borrows money, the transaction would involve:

• Debiting Notes Payable and crediting Cash

• Debiting Cash and crediting Notes Payable

• Debiting Equity and crediting Cash

• Debiting Cash and crediting Revenue

Asset accounts normally show which type of balance?

• Debit balance

• Credit balance

• Both debit and credit balances

• No balance

Liability accounts normally show which type of balance?

• Debit balance

• Credit balance

• Both debit and credit balances

• No balance

How is an increase in liabilities recorded?

• Debit

• Credit

• Both debit and credit

• Neither debit nor credit

Which of the following accounts increases equity?

• Expenses

• Revenues

• Dividends

• Liabilities

What happens to equity when revenue is recognized?

• Equity decreases

• Equity stays the same

• Equity increases

• Equity becomes zero