WorksheetsUnderstanding Accounts, Debits, and Credits
Total questions: 25
Worksheet time: 13mins
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
How does a dividend affect the equity of a business?
It increases equity
It has no effect on equity
It decreases equity
It decreases assets
Which account normally shows a credit balance?
Cash
Notes Payable
Equipment
Accounts Receivable
If a company pays for supplies, how would the transaction be recorded?
Debit Supplies, Credit Cash
Debit Cash, Credit Supplies
Debit Supplies, Credit Accounts Payable
Debit Accounts Payable, Credit Supplies
Which of the following accounts has a normal debit balance?
Revenue
Expenses
Liabilities
Equity
What is the effect of debiting an expense account?
Increases the expense
Decreases the expense
Increases equity
Decreases revenue
How are revenue accounts affected by debits and credits?
Debits decrease revenue, credits increase revenue
Debits increase revenue, credits decrease revenue
Debits increase equity, credits decrease equity
Revenue accounts are not affected by debits and credits
When a company sells goods on credit, how is the transaction recorded?
Debit Accounts Receivable, Credit Revenue
Debit Cash, Credit Accounts Receivable
Debit Revenue, Credit Cash
Debit Revenue, Credit Accounts Payable
Which of the following transactions would increase an asset?
Purchasing inventory on credit
Paying a dividend
Borrowing money from a bank
Paying off a loan
When a company pays dividends, how is the transaction recorded?
Debit Dividends, Credit Cash
Debit Cash, Credit Dividends
Debit Retained Earnings, Credit Dividends
Debit Revenue, Credit Dividends
If a business purchases equipment for cash, how would the transaction be recorded?
Debit Cash, Credit Equipment
Debit Equipment, Credit Cash
Debit Cash, Credit Accounts Payable
Debit Equipment, Credit Accounts Payable
When an owner invests cash into the business, which accounts are affected?
Debit Cash, Credit Capital
Debit Capital, Credit Cash
Debit Assets, Credit Capital
Debit Revenue, Credit Cash
Which of the following represents the correct application of debits and credits for a business loan?
Debit Notes Payable, Credit Cash
Debit Cash, Credit Notes Payable
Debit Cash, Credit Revenue
Debit Liabilities, Credit Assets
Which of the following would increase the equity of a business?
A decrease in expenses
A credit to an expense account
A debit to a revenue account
A decrease in liabilities
A debit to an asset account always increases that asset.
True
False
Credits decrease liability accounts.
True
False
