What is the basic rule of the double-entry system?
Correct answer: B. Every transaction has equal debit and credit effects
- A. Every transaction affects one account only
- B. Every transaction has equal debit and credit effects
- C. Every transaction is recorded only in the cash book
- D. Every transaction must involve a cash payment
Explanation
Double entry records the two-sided effect of each financial transaction. The total amount debited must equal the total amount credited, although the accounts affected may be different.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
Practise Double Entry and Books of Prime Entry
34 free Double Entry and Books of Prime Entry MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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