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AQA A-Level Accounting
3. The double entry model
3.2 Recording transactions
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Cards (53)
What is the fundamental principle of the double entry bookkeeping system?
Every transaction affects two accounts
Debits decrease liabilities and
equity
.
True
Debits increase the value of
assets
What type of account is 'Cash' considered in the double entry system?
Asset
Revenues are increased by debits.
False
For every transaction, the total debits must equal the total
credits
Every transaction in double entry bookkeeping keeps the accounting equation balanced.
True
What account is debited when a business purchases office supplies for cash?
'Office Supplies'
What are the five primary types of accounts in the double entry bookkeeping system?
Assets, liabilities, equity, revenues, expenses
What equation must remain balanced in the double entry bookkeeping system?
Assets = Liabilities + Equity
What is a liability in accounting terms?
Obligations to outside parties
What is an example of a revenue account?
Sales Revenue
A debit (Dr) increases assets and
expenses
What does a credit (Cr) increase in the accounting equation?
Liabilities, equity, and revenues
Credits decrease assets and expenses.
True
A credit to 'Accounts Payable' increases its
liability
What effect does a credit have on 'Expenses'?
Decreases them
Order the steps in recording the purchase of equipment for cash in the double entry system:
1️⃣ Debit the 'Equipment' (Asset) account
2️⃣ Credit the 'Cash' (Asset) account
A debit increases assets and
expenses
The purchase of office supplies for cash results in a credit to the 'Cash'
account
Each transaction in double entry bookkeeping ensures the
accounting equation
remains balanced.
True
In the double entry bookkeeping system, there are five primary types of
accounts
What is an example of an asset account?
Cash
Equity represents the
owner's
stake in the business.
True
What is an example of an expense account?
Salaries
When a business receives cash for services, the cash account is debited.
True
In the double-entry bookkeeping system, there are five main types of
accounts
If a business purchases office supplies for cash, which asset account is debited?
Office Supplies
What is the fundamental principle behind the double entry bookkeeping system?
Every transaction affects two accounts
If a business purchases office supplies for cash, the cash account is credited.
True
Assets are increased by a credit entry.
False
Equity is increased by a debit entry.
False
Steps to record a transaction using the double entry bookkeeping system
1️⃣ Identify affected accounts
2️⃣ Determine debit and credit entries
3️⃣ Update ledger accounts
Debiting an asset account decreases its balance.
False
Crediting equity increases its
balance
.
True
What type of entry increases the balance of expenses?
Debit
What account is debited when office supplies are purchased for cash?
Office Supplies
Steps to record a transaction using the double entry bookkeeping system
1️⃣ Identify affected accounts
2️⃣ Determine debit and credit entries
3️⃣ Update ledger accounts
Balancing accounts ensures that the total debits equal the total
credits
The rules of debit and credit determine how transactions affect different types of
accounts
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