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What is the double-entry accounting principle?

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Question: What is the double-entry accounting principle?

Options:

  1. Every transaction affects only one account
  2. Every transaction affects two or more accounts
  3. Only cash transactions are recorded
  4. Only credit transactions are recorded

Correct Answer: Every transaction affects two or more accounts

Solution: 

The double-entry accounting principle states that every transaction affects at least two accounts.

What is the double-entry accounting principle?

Practice Questions

Q1
What is the double-entry accounting principle?
  1. Every transaction affects only one account
  2. Every transaction affects two or more accounts
  3. Only cash transactions are recorded
  4. Only credit transactions are recorded

Questions & Step-by-Step Solutions

What is the double-entry accounting principle?
  • Step 1: Understand that in accounting, every financial transaction involves money moving in and out.
  • Step 2: Know that each transaction must be recorded in at least two different accounts.
  • Step 3: Recognize that one account will be debited (increased) and another account will be credited (decreased) by the same amount.
  • Step 4: Remember that this method helps keep the accounting equation (Assets = Liabilities + Equity) balanced.
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