Debits And Credits Quiz

1. What helps keep the books in balance?

Making a lot of sales

Entering each transaction value as a debit and as a credit in the relevant ledger accounts

Not letting the bank account go into overdraft

Entering each transaction value as a debit and as a credit in the relevant ledger accounts helps keep the books in balance because it ensures that every transaction is recorded accurately and in a way that maintains the fundamental accounting equation (Assets = Liabilities + Equity). By recording each transaction as a debit in one account and a credit in another, the total debits will always equal the total credits, keeping the books in balance. This is a fundamental principle of double-entry bookkeeping, which helps to ensure the accuracy and integrity of financial records.

Explanation

Entering each transaction value as a debit and as a credit in the relevant ledger accounts helps keep the books in balance because it ensures that every transaction is recorded accurately and in a way that maintains the fundamental accounting equation (Assets = Liabilities + Equity). By recording each transaction as a debit in one account and a credit in another, the total debits will always equal the total credits, keeping the books in balance. This is a fundamental principle of double-entry bookkeeping, which helps to ensure the accuracy and integrity of financial records.

2. Which sides do the debits and credits go on?

Debits on the right, credits on the left

Debits and credits both in the centre

Debits on the left and credits on the right

Debits and credits are the two fundamental components of double-entry bookkeeping. In this system, debits are recorded on the left side of an account, while credits are recorded on the right side. This convention is based on the principle that assets and expenses increase with debits and decrease with credits, while liabilities, equity, and revenue increase with credits and decrease with debits. Therefore, debits are placed on the left side and credits on the right side to ensure accurate and balanced accounting records.

Explanation

Debits and credits are the two fundamental components of double-entry bookkeeping. In this system, debits are recorded on the left side of an account, while credits are recorded on the right side. This convention is based on the principle that assets and expenses increase with debits and decrease with credits, while liabilities, equity, and revenue increase with credits and decrease with debits. Therefore, debits are placed on the left side and credits on the right side to ensure accurate and balanced accounting records.

3. What dictates the debit and credit entries?

The golden rule

The guidelines of the banks

The accounting equation

The accounting equation dictates the debit and credit entries. The accounting equation states that assets equal liabilities plus equity. This equation forms the basis for double-entry bookkeeping, where every transaction must be recorded using both a debit and a credit entry. Debits and credits are used to increase or decrease the different accounts in the accounting equation, ensuring that the equation remains balanced. Therefore, the accounting equation is what determines whether an entry should be recorded as a debit or a credit.

Explanation

The accounting equation dictates the debit and credit entries. The accounting equation states that assets equal liabilities plus equity. This equation forms the basis for double-entry bookkeeping, where every transaction must be recorded using both a debit and a credit entry. Debits and credits are used to increase or decrease the different accounts in the accounting equation, ensuring that the equation remains balanced. Therefore, the accounting equation is what determines whether an entry should be recorded as a debit or a credit.

4. Double entry bookkeeping requires all transactions to be entered to the ledgers..

Once minimum

Twice minimum

Four times minimum

Double entry bookkeeping requires all transactions to be entered twice in the ledgers. This means that for every transaction, there should be a debit entry and a corresponding credit entry. This ensures that the accounting equation (assets = liabilities + equity) remains balanced. By recording transactions twice, it helps to maintain accuracy and prevent errors in the financial records. This method also allows for easy identification and correction of any mistakes or discrepancies that may occur.

Explanation

Double entry bookkeeping requires all transactions to be entered twice in the ledgers. This means that for every transaction, there should be a debit entry and a corresponding credit entry. This ensures that the accounting equation (assets = liabilities + equity) remains balanced. By recording transactions twice, it helps to maintain accuracy and prevent errors in the financial records. This method also allows for easy identification and correction of any mistakes or discrepancies that may occur.

5. What is increased and decreased by the debits and credits on each ledger account?

The number of transactions

The total values

The quantity of pages

The correct answer is "The total values". In accounting, debits and credits are used to record the financial transactions of a company. Debits increase the total values of assets and expenses, while credits decrease the total values of liabilities, equity, and revenues. Therefore, debits and credits affect the total values of each ledger account. The number of transactions and the quantity of pages are not directly affected by debits and credits.

Explanation

The correct answer is "The total values". In accounting, debits and credits are used to record the financial transactions of a company. Debits increase the total values of assets and expenses, while credits decrease the total values of liabilities, equity, and revenues. Therefore, debits and credits affect the total values of each ledger account. The number of transactions and the quantity of pages are not directly affected by debits and credits.

6. A business buys stationery using their bank card - select the two correct entries below:-

Debit the stationery account

Credit the stationery account

Debit the bank account

Credit the bank account

When a business buys stationery using their bank card, the stationery account should be debited to record the increase in stationery assets. At the same time, the bank account should be credited to reflect the decrease in funds due to the purchase. This ensures that the transaction is properly recorded in both accounts, accurately reflecting the financial impact of the purchase.

Explanation

When a business buys stationery using their bank card, the stationery account should be debited to record the increase in stationery assets. At the same time, the bank account should be credited to reflect the decrease in funds due to the purchase. This ensures that the transaction is properly recorded in both accounts, accurately reflecting the financial impact of the purchase.

Submit

7. A credit entry can be split into more than one debit entry?

True

False

Yes, a credit entry can be split into more than one debit entry. This is a common practice in accounting, where a single credit entry can be used to record multiple debit entries for different accounts. This allows for accurate recording of transactions involving multiple accounts and ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Explanation

Yes, a credit entry can be split into more than one debit entry. This is a common practice in accounting, where a single credit entry can be used to record multiple debit entries for different accounts. This allows for accurate recording of transactions involving multiple accounts and ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced.

8. A business makes a sale and deposits the payment to the bank - select the two correct entries below:-

Debit the income account

Credit the income account

Debit the bank account

Credit the bank account

When a business makes a sale and deposits the payment to the bank, it should credit the income account because it represents an increase in revenue for the business. This entry reflects the earnings from the sale. On the other hand, the business should debit the bank account to reflect the increase in its cash balance due to the deposit. This entry shows that the payment has been received and added to the bank account.

Explanation

When a business makes a sale and deposits the payment to the bank, it should credit the income account because it represents an increase in revenue for the business. This entry reflects the earnings from the sale. On the other hand, the business should debit the bank account to reflect the increase in its cash balance due to the deposit. This entry shows that the payment has been received and added to the bank account.

Submit

9. Match the following

Expenses

Income

Submit

10. Each entry is recorded with which of the following methods.

Once as a debit and once as a credit in the same ledger account

Neither of the above

Each entry in accounting is recorded using the double-entry system, which means that it is recorded at least once as a debit in one ledger account and at least once as a credit in a different ledger account. This ensures that the accounting equation (Assets = Liabilities + Equity) remains in balance and allows for accurate recording of financial transactions.

Explanation

Each entry in accounting is recorded using the double-entry system, which means that it is recorded at least once as a debit in one ledger account and at least once as a credit in a different ledger account. This ensures that the accounting equation (Assets = Liabilities + Equity) remains in balance and allows for accurate recording of financial transactions.