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Exam 17: Double-Entry Bookkeeping I

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Question 1

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If the statement of financial position shows a bank balance of £43,000, then the bank T account will have a debit balance of £43,000 at that date.

A) True
B) False

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Question 2

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Double-entry bookkeeping requires one entry be made to record every business transaction, one a debit entry and one a credit entry.

A) True
B) False

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Question 3

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The accounting equation states that 'assets= capital-liabilities'.

To increase an expense account, the account has to be debited.

To increase a liability account, the account has to be debited.

A trade payables account will usually show a credit balance.

When a business makes a loss as shown by the statement of profit or loss, the profit figure is credited to the capital account to show the owner's increased investment in the business.

If Jo buys a van using a bank payment to do so, then the bank account would be debited and the van account would be credited.

If the trial balance totals agree, this means that all transactions have been recorded.

The statement of profit or loss is a summary of the balances remaining after the statement of financial position has been prepared.