Debits & Credits Quiz
1. In bookkeeping, what does the term "Debit" literally mean?
An increase in value
The left side of an account ledger
A decrease in cash
The right side of an account ledger
Correct! Debit simply means left.
Incorrect. "Debit" translates to the left side of an account ledger.
2. Which account types naturally increase with a Debit?
Assets and Expenses
Liabilities and Revenue
Equity and Liabilities
Revenue and Expenses
Correct! Assets and Expenses increase with a debit.
Incorrect. Assets and Expenses naturally increase on the left (Debit) side.
3. To decrease a Liability account, you must enter the transaction as a:
Credit
Debit
Balanced entry
Contra-asset
Correct! Debiting a liability reduces it.
Incorrect. Liabilities increase with credits, so they decrease with a Debit.
4. A business purchases new equipment using cash. What is the correct entry for the Equipment account?
Credit the Equipment account
Debit the Equipment account
No entry is needed
Debit and Credit the Equipment account simultaneously
Correct! Equipment is an asset, which increases via a Debit.
Incorrect. Equipment is an asset that is increasing, so it must be Debited.
5. When a business earns revenue by delivering a service, the Revenue account is:
Debited
Credited
Left unchanged until the end of the year
Moved to the asset ledger
Correct! Revenue increases with a Credit.
Incorrect. Revenue accounts are increased on the right side using a Credit.
6. If total debits do not equal total credits in a specific transaction, what does this violate?
The historical cost principle
The rule of double-entry accounting
The revenue recognition principle
The cash basis rule
Correct! In double-entry accounting, debits must always equal credits.
Incorrect. It violates double-entry accounting, which demands that total debits must equal total credits.
7. A business makes a payment toward a bank loan using cash. What happens to the Cash account?
It is Debited because it is decreasing
It is Credited because it is decreasing
It is Credited because it is increasing
It remains unchanged
Correct! Cash is an asset; a decrease requires a Credit.
Incorrect. Cash is an asset account. When cash goes down, you must Credit the account.
8. What is the normal balance side for Owner's Equity and Liability accounts?
Debit (Left side)
Credit (Right side)
They do not have a normal balance side
It changes monthly based on activity
Correct! Both normally have a Credit balance.
Incorrect. Liabilities and Equity sit on the right side of the accounting equation and have a normal Credit balance.
9. Paying the monthly rent for an office building involves:
Crediting Rent Expense and Debiting Cash
Debiting Rent Expense and Crediting Cash
Debiting Rent Expense and Debiting Liabilities
Crediting Rent Expense and Crediting Revenue
Correct! Rent Expense increases (Debit) and Cash decreases (Credit).
Incorrect. You increase Rent Expense with a Debit and decrease your Cash asset with a Credit.
10. If an account has a normal debit balance, what does this mean?
The account is expected to have an active balance on the left side
The account must never be credited
The account represents a business debt
The account status is currently negative
Correct! A normal balance is the side where increases are tracked.
Incorrect. A normal balance means that the side used to increase the account (left/debit) is typically the side with a positive remaining balance.
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