Double Entry Bookkeeping Test

Question 1

The receipt of rent paid by a renter necessitates entries in the bank account and the

Accepted Answer

Rent Received Account

Answer

When a business receives rent paid by a renter, two accounts are affected. The bank account (or Cash account) increases, which is a debit. Simultaneously, the Rent Received Account (a revenue account) increases, which is a credit. This adheres to the double-entry accounting principle.

Question 2

The account's name is always at the top.

Accepted Answer

True

Answer

True. In accounting, every ledger account is clearly identified by its name, which is always placed at the top of the account. This allows for easy identification and organization of financial data, ensuring that transactions are recorded in the correct accounts.

Question 3

Payment of insurance through the bank necessitates the creation of two separate accounts.

Accepted Answer

Insurance Account

Answer

When an insurance payment is made through the bank, two accounts are directly affected. The 'Insurance Account' is debited to record the expense incurred by the business. Concurrently, the 'Bank Account' is credited to reflect the decrease in cash held at the bank, adhering to the double-entry bookkeeping principle.

Question 4

The debit side of the double entry account is on the right.

Accepted Answer

False

Answer

In double-entry bookkeeping, the debit side of any T-account is always positioned on the left. Conversely, the credit side is consistently found on the right. This is a fundamental convention in accounting that dictates how increases and decreases are recorded for different types of accounts.

Question 5

The DEBIT entry is always made on the ____ side of the ledger.

Accepted Answer

Left

Answer

The DEBIT entry is consistently made on the left side of a ledger account. This is a foundational rule in double-entry bookkeeping, where accounts are often visualized as T-accounts with the left side designated for debits. This convention ensures uniformity and clarity in financial record-keeping.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

Double Entry Bookkeeping Test