CHAPTER 3

Question 1

What is the double-entry system?

Answer 1

The double-entry system is an accounting method where each transaction affects at least two accounts, ensuring the accounting equation remains balanced.

Question 2

What are the three types of accounts?

Answer 2

Asset, Liabilities, Equity

Question 3

What is a journal entry?

Answer 3

A journal entry is a record of a transaction in the accounting journal, detailing the accounts affected and their debits and credits.

Question 4

What is the normal balance of an asset account?

Answer 4

Debit

Question 5

What is the normal balance of a liability account?

Answer 5

Credit

Question 6

What is the normal balance of an equity account?

Answer 6

Credit (Income)

Question 7

What is the purpose of a chart of accounts?

Answer 7

A chart of accounts is a list of all accounts used by a business, organized by category, to facilitate record-keeping.

Question 8

What is an example of a compound journal entry?

Answer 8

A compound journal entry is one that involves more than two accounts, such as a transaction involving cash, inventory, and accounts payable.

Question 9

How are expenses recorded in the accounting system?

Answer 9

Expenses are recorded as debits to the expense accounts and credits to either cash or accounts payable, depending on the payment method.

Question 10

What is a posting in accounting?

Answer 10

Posting is the process of transferring information from the journal to the ledger accounts.