4.2 Questions and Answers

What condition is true for an accounting entry that does not balance?

A debit or credit may be missing or misplaced.

For what accounts does an decrease mean credit?

Asset Accounts

For what accounts does an increase mean debit?

Asset Accounts

Explain the meaning of the words debit and credit.

Debits on the left. Credits on the right.

What must be true of every correct accounting entry?

Every entry must have at least one debit and one credit for the accounts to remain balanced.

What condition is true for an accounting entry that does balance?

It haas a matching debit and credit entry in the correct accounts.

What is an accounting entry?

It is all the changes in the accounts caused by one business transaction, expressed in terms of debits and credits.

What is a transaction analysis sheet used for?

It is used for the purpose of analyzing all transactions in a ledger.

For what accounts does an decrease mean debit?

Liability Accounts

For what accounts does an increase mean credit?

Liability Accounts

How is the beginning financial position in a ledger set up?

The beginning values of assets are placed on the left side, while the liabilities are placed on the right side of their respective accounts

Explain the meaning of the double-entry system of accounting.

The transactions are recorded first as a debit, then as a credit, in order to maintain balance to the accoutning equation.