Understanding Bookkeeping Basics

What is the fundamental principle of double-entry bookkeeping?

• Every transaction affects only one account.

• Every transaction affects at least two accounts.

• Every transaction is recorded only once.

• Every transaction is recorded in a single ledger.

Which of the following is considered an asset in accounting?

• Bank loan

• Office furniture

• Outstanding bills

• Employee salaries

What is the accounting equation?

• Assets = Liabilities + Equity

• Assets = Liabilities - Equity

• Assets = Liabilities x Equity

• Assets = Liabilities / Equity

Which of the following is a tangible asset?

• Trademark

• Patent

• Building

• Goodwill

What is the purpose of the accrual principle in accounting?

• To record transactions only when cash is received or paid.

• To record transactions when they occur, regardless of cash flow.

• To record transactions at the end of the financial year.

• To record transactions only when they are approved by management.

Which of the following is an example of a liability?

• Cash in hand

• Accounts payable

• Inventory

• Office equipment

What is the main characteristic of intangible assets?

• They have a physical form.

• They cannot be seen or touched.

• They depreciate over time.

• They are always current assets.

Which accounting principle requires that expenses be matched with revenues?

• Consistency principle

• Matching principle

• Prudence principle

• Materiality principle

What does the term "debit" mean in double-entry bookkeeping?

• An increase in liabilities

• An increase in assets

• A decrease in assets

• A decrease in liabilities

Which of the following is NOT a component of the accounting equation?

• Assets

• Liabilities

• Revenue

• Equity