Double Entry Accounting Trivia Quiz
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Which of the following statements about double-entry accounting is incorrect?
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Every transaction affects at least two accounts.
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Debits always increase an account balance, while credits always decrease it.
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The accounting equation (Assets = Liabilities + Equity) must always be in balance.
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Double-entry bookkeeping helps in detecting errors and preventing fraud.
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Have you been studying accounting? If yes, then it should not be a problem for you to pass this double entry accounting trivia quiz. Double-entry accounting is known as a system that needs two book entries — one debit and one credit — for each transaction made within a business. How much do you really understand double accounting? Attempt some See morequestions in this quiz, and we will see this very soon.
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- 2.
The normal balance of an asset is ____ while the normal balance of liability is ____
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Debit, credit
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Credit, credit
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Debit, debit
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Credit, debit
Correct Answer
A. Debit, creditExplanation
In accounting, the normal balance of an asset account is debit, meaning that an increase in assets is recorded as a debit entry. On the other hand, the normal balance of a liability account is credit, meaning that an increase in liabilities is recorded as a credit entry. This is because assets are resources owned by the company, and an increase in assets represents an inflow of resources, which is recorded as a debit. Liabilities, on the other hand, represent obligations or debts of the company, and an increase in liabilities represents an increase in the company's obligations, which is recorded as a credit.Rate this question:
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- 3.
The liabilities increase by RM7000. How is the accounting equation affected?
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Assets must have increased by RM 7000, or equity must have decreased by RM 7000
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Assets must have decreased by RM 7000
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Assets and equity must have each decreased by RM 3,500
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Owners equity must have increased by RM 7000.
Correct Answer
A. Assets must have increased by RM 7000, or equity must have decreased by RM 7000Explanation
The accounting equation states that Assets = Liabilities + Equity. If the liabilities increase by RM7000, the equation must still balance. Therefore, either the Assets must have increased by RM7000 to maintain the balance, or the equity must have decreased by RM7000 to offset the increase in liabilities.Rate this question:
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- 4.
Double-entry accounting reflects:
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The accruals concept
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The duality concept.
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The matching concept.
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The prudence concept.
Correct Answer
A. The duality concept.Explanation
The duality concept is reflected in double-entry accounting. This concept states that every transaction has two aspects - a debit and a credit. In other words, for every debit entry, there must be a corresponding credit entry of equal value. This ensures that the accounting equation (assets = liabilities + equity) remains in balance. Double-entry accounting is based on this principle and helps maintain accurate and complete financial records by recording both the giving and receiving aspects of each transaction.Rate this question:
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- 5.
What does a creditor account of RM 8,500 in the double-entry system represent?
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An item of income to the business.
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An asset of the business.
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An expense of the business.
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Liability of the business.
Correct Answer
A. Liability of the business.Explanation
In the double-entry system, a creditor account of RM 8,500 represents a liability of the business. This means that the business owes this amount to a creditor. A liability is an obligation or debt that a business has to pay in the future. In this case, the business has incurred a debt of RM 8,500 to a creditor, which is recorded in the creditor account as a liability.Rate this question:
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- 6.
Which one of the following categories of account is debited when it is increased?
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Revenue
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Purchases
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Sources of fund
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Liability
Correct Answer
A. PurchasesExplanation
When purchases increase, the category of account that is debited is also purchases. This is because purchases are considered an expense for a business. When a business buys goods or services for resale, the purchases account is debited to reflect the increase in expenses. This helps in accurately tracking and recording the cost of goods sold and maintaining the financial records of the business.Rate this question:
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- 7.
Which category of accounts is credited at the time it is increased?
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Revenue
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Purchases
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Asset
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Expenses
Correct Answer
A. RevenueExplanation
Revenue is the category of accounts that is credited at the time it is increased. This is because revenue represents the income earned by a company from its normal business operations. When revenue increases, it is recorded as a credit entry in the accounting books to reflect the increase in the company's overall income.Rate this question:
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- 8.
Which one of the following categories of account is debited when it is decreased?
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Liabilities
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Expenses
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Purchases
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Expenses
Correct Answer
A. LiabilitiesExplanation
Liabilities are accounts that represent what a company owes to its creditors or other entities. When a liability decreases, it means that the company has paid off a portion of its debt or obligation. Therefore, the category of account that is debited when liabilities decrease is Liabilities.Rate this question:
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- 9.
When an account in the asset category is decreased, it is credited.
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True
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False
Correct Answer
A. TrueExplanation
When an account in the asset category is decreased, it is credited because assets have a normal debit balance. In accounting, debits and credits are used to record transactions. When an asset account is decreased, it means that there has been an outflow or reduction of assets. To record this decrease, a credit entry is made to the asset account, which helps maintain the balance in the accounting equation. Therefore, the statement "When an account in the asset category is decreased, it is credited" is true.Rate this question:
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- 10.
Purchase a van and pay by cheque. Debit _______ account, credit bank account.
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Vehicle
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Asset
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Loan
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None of these
Correct Answer
A. VehicleExplanation
When purchasing a van and paying by cheque, the transaction involves debiting the Vehicle account and crediting the bank account. This is because the van is considered an asset, and debiting the Vehicle account increases the value of the asset. At the same time, the bank account is being credited as the payment is being made from the bank. Therefore, the correct answer is Vehicle.Rate this question:
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Current Version
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Sep 30, 2024Quiz Edited by
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Aug 09, 2011Quiz Created by
Azlinahmdn
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