Double Entry Accounting Quiz
Questions: 16 · 10 minutes
1. A business buys office supplies for cash and will use them in future periods. What is the initial entry?
Debit Cash; credit Supplies
Debit Accounts Payable; credit Cash
Debit Supplies Expense; credit Accounts Payable
Debit Supplies; credit Cash
2. One month of previously prepaid insurance has expired. Which adjusting entry recognizes the amount used?
Debit Prepaid Insurance; credit Insurance Expense
Debit Cash; credit Insurance Expense
Debit Accounts Payable; credit Prepaid Insurance
Debit Insurance Expense; credit Prepaid Insurance
3. A trial balance has equal debit and credit totals. What can be concluded?
The business has earned a profit for the period.
Every transaction has definitely been posted to the correct accounts.
Recorded debits and credits are arithmetically equal, but some errors may still exist.
All account balances agree with bank and supplier records.
4. A customer pays in advance for services the business has not yet provided. What is the initial entry?
Debit Accounts Receivable; credit Service Revenue
Debit Cash; credit Service Revenue
Debit Cash; credit Unearned Revenue
Debit Unearned Revenue; credit Cash
5. A customer pays an outstanding invoice. Which entry should the business make?
Debit Cash; credit Accounts Receivable
Debit Cash; credit Sales Revenue
Debit Sales Revenue; credit Accounts Receivable
Debit Accounts Receivable; credit Sales Revenue
6. The business receives a utility bill for electricity already used but will pay it next month. Which entry is appropriate?
Debit Accounts Payable; credit Utility Expense
Debit Utility Expense; credit Cash
Debit Utility Expense; credit Accounts Payable
Debit Prepaid Utilities; credit Accounts Payable
7. Which statement best describes the basic rule of double-entry accounting?
Every transaction records equal total debits and credits.
Every transaction must affect one asset and one liability.
Each account must have an equal debit and credit balance.
Every transaction must be entered twice in the same account.
8. A company pays $1,200 for 12 months of insurance coverage beginning today. Using the asset approach, what is the initial entry?
Debit Prepaid Insurance; credit Cash
Debit Insurance Expense; credit Accounts Payable
Debit Cash; credit Prepaid Insurance
Debit Insurance Expense; credit Prepaid Insurance
9. A bank deposits loan proceeds directly into a company's bank account. Which entry records the transaction?
Debit Loan Payable; credit Cash
Debit Cash; credit Owner's Capital
Debit Cash; credit Loan Payable
Debit Interest Expense; credit Loan Payable
10. A business purchases equipment for $5,000 cash. What is the immediate effect on the accounting equation?
Total assets increase by $5,000, and equity increases by $5,000.
Assets decrease by $5,000, and expenses increase by $5,000.
Assets increase by $5,000, and liabilities increase by $5,000.
One asset increases and another decreases, leaving total assets unchanged.
11. Employees have earned wages by period-end, but the wages will be paid next period. Which adjusting entry is needed?
Debit Wages Payable; credit Cash
Debit Wages Payable; credit Wages Expense
Debit Prepaid Wages; credit Cash
Debit Wages Expense; credit Wages Payable
12. A business pays a supplier for inventory previously purchased on credit. Which entry records the payment?
Debit Accounts Payable; credit Cash
Debit Cash; credit Accounts Payable
Debit Inventory Expense; credit Accounts Payable
Debit Inventory; credit Cash
13. A sole proprietor withdraws business cash for personal use. Which entry is generally appropriate?
Debit Wages Expense; credit Cash
Debit Owner's Drawings; credit Cash
Debit Cash; credit Owner's Capital
Debit Owner's Capital; credit Revenue
14. A company completes a $900 service for a customer and sends an invoice. Which entry records the sale?
Debit Sales Revenue; credit Accounts Receivable
Debit Accounts Receivable; credit Sales Revenue
Debit Cash; credit Sales Revenue
Debit Accounts Receivable; credit Cash
15. Which error could leave a trial balance equal even though the accounting records are incomplete?
Posting a $540 debit but a $450 credit for the same transaction
Omitting an entire transaction, including both its debit and credit
Transposing digits on only the credit side of an entry
Recording only the debit side of a transaction
16. Which type of account normally increases with a debit?
Liability
Expense
Revenue
Owner's equity