MODULE 3 Flashcards
reviewer
Q: What is the most basic tool of accounting that must maintain equality at all times?
A: The accounting equation.
Q: What is the basic accounting equation?
A: ASSETS = LIABILITIES + EQUITY
Q: What happens if the equality of the accounting equation is not maintained?
A: There is an error.
Q: What is the basic summary device in accounting?
A: An account.
Q: What does an account record?
A: The increases and decreases in a specific item of asset, liability, equity, income, or expense.
Q: What is the simplest form of an account?
A: A T-account.
Q: What is the left side of the account or accounting equation called?
A: Debit.
Q: From which Latin word is the term “debit” derived?
A: Debere.
Q: What is the right side of the account or accounting equation called?
A: Credit.
Q: From which Latin word is the term “credit” derived?
A: Credere.
Q: What is the accounting system that records the dual effects of a business transaction?
A: The double-entry accounting system.
Q: How are transactions recorded in the double-entry accounting system?
A: Each transaction is recorded in two parts: debit and credit.
Q: Can a transaction be recorded by a debit alone or a credit alone?
A: No, every transaction must have both a debit and a credit.
Q: What must the total debits for a transaction always equal?
A: The total credits.
