Double Entry Bookkeeping Quiz

1. What is the fundamental principle of double-entry bookkeeping?

Every transaction affects only one account. Every debit must have a corresponding credit. Only cash transactions are recorded. Assets must always equal liabilities.

2. In double-entry bookkeeping, what does a 'debit' typically represent for an asset account?

A decrease in the asset. An increase in the asset. No change in the asset. A liability increase.

3. Which of the following accounts normally has a credit balance?

Cash Accounts Receivable Accounts Payable Equipment

4. The accounting equation is:

Assets = Liabilities - Owner's Equity Liabilities = Assets + Owner's Equity Assets + Liabilities = Owner's Equity Assets = Liabilities + Owner's Equity

5. When a business purchases supplies on credit, which accounts are affected?

Cash and Supplies Supplies and Accounts Payable Supplies and Revenue Accounts Receivable and Supplies

6. What is a 'journal' in bookkeeping?

A summary of all account balances. The book of original entry where transactions are first recorded. A financial statement showing profit or loss. A list of all assets owned by the business.

7. 'Posting' refers to the process of:

Recording transactions in the journal. Transferring journal entries to the ledger accounts. Preparing financial statements. Calculating the trial balance.

8. Which account increases with a debit and decreases with a credit?

Liabilities Owner's Equity Revenue Expenses

9. A trial balance is prepared to:

Show the company's financial position. Check the mathematical equality of debits and credits in the ledger. Determine the net income or loss. List all cash transactions.

10. What is the normal balance of a revenue account?

Debit Credit Zero Depends on the transaction

11. If a company provides services to a customer on credit, what is the journal entry?

Debit Cash, Credit Service Revenue Debit Accounts Receivable, Credit Service Revenue Debit Service Revenue, Credit Accounts Receivable Debit Accounts Payable, Credit Service Revenue

12. The asset account 'Cash' increases with a:

Debit Credit Neither debit nor credit Both debit and credit

13. When an owner invests cash into the business, which accounts are affected?

Cash and Salaries Expense Cash and Owner's Capital Accounts Payable and Cash Revenue and Owner's Capital

14. An increase in an expense account is recorded as a:

Credit Debit Both debit and credit No entry

15. The 'Ledger' is a collection of all:

Journal entries Financial statements Accounts used by a company Purchase invoices

16. Which of the following is NOT a type of account in the accounting equation?

Assets Liabilities Expenses Capital

17. When a company pays a utility bill, the transaction would involve a:

Debit to Cash, Credit to Utilities Expense Debit to Accounts Payable, Credit to Cash Debit to Utilities Expense, Credit to Cash Debit to Utilities Expense, Credit to Accounts Payable

18. Drawings by the owner for personal use would:

Increase owner's equity. Decrease owner's equity. Not affect owner's equity. Increase liabilities.

19. If a company sells goods for cash, the accounts involved are:

Sales Revenue and Accounts Receivable Cash and Cost of Goods Sold Cash and Sales Revenue Inventory and Sales Revenue

20. The purpose of the 'Chart of Accounts' is to:

List all the transactions that occurred. Provide a list of all accounts used by a business and their account numbers. Summarize the financial performance of the company. Show the assets and liabilities of the company at a specific point in time.