Double Entry Book Keeping Basics

What is the fundamental principle of double entry bookkeeping that states every transaction affects at least two accounts?

• The ledger rule

• The transaction method

• The accounting principle

• The duality principle

In double entry bookkeeping, if a business purchases equipment worth $500 in cash, which two accounts are affected?

• Inventory and Cash

• Equipment and Accounts Payable

• Cash and Revenue

• Equipment and Cash

What does the term 'debit' mean in the context of double entry bookkeeping?

• A debit is an entry that decreases assets or expenses and increases liabilities or equity.

• A debit is a transaction that only affects income accounts in bookkeeping.

• A debit is an entry that increases assets or expenses and decreases liabilities or equity in double entry bookkeeping.

• A debit is an entry that records cash inflows without affecting other accounts.

Which side of a T-account is used to record a credit entry?

• Left side

• Bottom side

• Right side

• Top side

If a business receives cash from a customer, which account is debited and which account is credited?

• Debit Cash account, Credit Sales Revenue account

• Debit Cash account, Credit Inventory account

• Debit Sales Revenue account, Credit Cash account

• Debit Accounts Receivable account, Credit Cash account

What is the golden rule for a Personal Account in double entry bookkeeping?

• Debit the account, credit the balance.

• Debit the receiver, credit the giver.

• Debit the owner, credit the asset.

• Debit the giver, credit the receiver.

In double entry bookkeeping, what must always be equal to maintain the accounting equation?

• Assets must equal Liabilities plus Equity.

• Equity must equal Assets plus Liabilities.

• Liabilities must equal Assets minus Equity.

• Assets must equal Revenue plus Expenses.

When a business pays rent in cash, which account is debited and which account is credited?

• Debit Cash, Credit Rent Payable

• Debit Rent Income, Credit Cash

• Debit Rent Expense, Credit Cash

• Debit Utilities Expense, Credit Rent

What type of account is 'Capital' in double entry bookkeeping, and on which side does it normally have a balance?

• Capital is an expense account and typically has a debit balance.

• Capital is an equity account and normally has a credit balance.

• Capital is a liability account and normally has a debit balance.

• Capital is an asset account and usually has a credit balance.

If total debits in a ledger do not equal total credits, what does this indicate about the bookkeeping records?

• There is a discrepancy in the account totals.

• The records are complete and accurate.

• There is an error in the bookkeeping records.

• The ledger is balanced correctly.