Test Your Knowledge - Double Entry System

The Double Entry System is based on:

One debit and one credit entry
Two credits and one debit entry
One debit and two credit entries

In the Double Entry System, for every debit entry, there must be:

A credit entry
A cash entry
A cash receipt

Which of the following is an example of a debit entry in the Double Entry System?

Cash received from a customer
Sales on credit
Payment of wages

What does the term "balance" in the Double Entry System refer to?

The difference between debits and credits
The amount of cash on hand
The amount owed by customers

Which type of account is affected by both a debit and a credit entry in the Double Entry System?

Revenue accounts
Liability accounts
All accounts

Which of the following is a rule for the Double Entry System?

Debit all income, Credit all expenses
Debit assets, Credit liabilities and equity
Debit liabilities, Credit assets

The Double Entry System helps maintain:

A complete financial record
Only the bank account records
Only cash transactions

Which account would be credited when a business purchases office equipment on credit?

Equipment account
Accounts payable account
Cash account

The double-entry system ensures that:

All transactions are recorded in two places
Only the most important transactions are recorded
Transactions are recorded in one account

What is the result of improper application of the double entry system?

Balanced books
Financial errors and discrepancies
Improved financial accuracy

Test Your Knowledge - You have 10 questions!