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Journal Entries: Debits and Credits quiz #1 Flashcards

Journal Entries: Debits and Credits quiz #1
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  • What is the basic principle behind every accounting transaction?
    Every accounting transaction involves giving something up and receiving something in return, affecting at least two accounts.
  • How many accounts are affected by each transaction in accounting?
    Each transaction affects at least two accounts.
  • What system is used to record transactions in accounting?
    The system of debits and credits is used to record transactions in accounting.
  • What must be true about the total debits and credits in every transaction?
    The total debits must always equal the total credits in every transaction.
  • How do asset accounts change with debits and credits?
    Asset accounts increase with debits and decrease with credits.
  • How do expense accounts change with debits and credits?
    Expense accounts increase with debits and decrease with credits.
  • How do liability accounts change with debits and credits?
    Liability accounts increase with credits and decrease with debits.
  • How do equity accounts change with debits and credits?
    Equity accounts increase with credits and decrease with debits.
  • How do revenue accounts change with debits and credits?
    Revenue accounts increase with credits and decrease with debits.
  • Why is it important to memorize the rules of debits and credits?
    Memorizing the rules of debits and credits is crucial because it ensures accurate recording of transactions and helps maintain balanced accounts.
  • What happens to the cash account when a company receives cash?
    When a company receives cash, the cash account is debited, increasing its balance.
  • What happens to the cash account when a company pays cash for something?
    When a company pays cash, the cash account is credited, decreasing its balance.
  • If a company buys land with cash, which accounts are affected and how?
    The land (asset) account is debited (increased) and the cash (asset) account is credited (decreased).
  • If a company sells inventory, which accounts are affected and how?
    The inventory (asset) account is credited (decreased) and the revenue account is credited (increased).
  • What is the effect of a debit on an asset account?
    A debit increases an asset account.
  • What is the effect of a credit on a liability account?
    A credit increases a liability account.
  • What is the effect of a debit on an expense account?
    A debit increases an expense account.
  • What is the effect of a credit on an equity account?
    A credit increases an equity account.
  • What is the effect of a debit on a revenue account?
    A debit decreases a revenue account.
  • What is the effect of a credit on an asset account?
    A credit decreases an asset account.