What are the advantages of a Double-entry Accounting System?

Prevents and minimizes fraud. Frauds can be even detected early. Errors can be checked and rectified easily. The outstanding balances of receivables and payables are determined easily since the personal accounts are maintained.

What are the disadvantages of a Double-entry System?

The disadvantages of double-entry Bookkeeping are inflation cannot be handled as money is an inflexible unit of measurement, any events that cannot be expressed in terms of money are not recorded, and it is sometimes difficult to find errors if the wrong amount is entered in the record.

What is a Double-entry System?

An accounting system in which transactions are recorded from a single aspect. An accounting system in which business transactions are recorded from dual aspects

What is the rule of the Double-entry System?

The rule of double-entry is the foundation of accounting. It states that for every financial transaction, there must be two entries in order to accurately reflect the company's financial position. This ensures that all transactions are accounted for and provides a more accurate picture of the company's financial health.

What is the example of a Double-entry System?

One of the most common examples of double-entry accounting is when a company makes a sale. In order to record this transaction, the company would debit (increase) its Accounts Receivable account and credit (increase) its Sales account. This ensures that the company's books are in balance and reflects the fact that it has earned revenue from the sale.

Double Entry Bookkeeping MCQ Quiz With Answers

This quiz on double entry bookkeeping is helpful preparation for accounting and finance students who are sitting exams or participating in interviews.

If you are unsure about any of the questions, you would benefit from first reading our entries on double entry bookkeeping.

1. In simple words, the occurrence of something is called a:

Transaction
Sale
Event
Purchase

2. Events related to money are called:

Monetary events
Non-monetary events
Composite events
Simple events

3. Events unrelated to money are called:

Non-monetary events
Monetary events
Composite events
Simple events

4. A dealing between two parties for a particular thing is called a:

Event
Monetary event
Non-monetary event
Transaction

5. Transactions involving a business and a second outside party are called:

Internal transactions
External transactions
Monetary events
Non-monteray events

6. Transactions that do not involve an outside party are called:

Internal transactions
External transactions
Monetary events
Non-monetary events

7. The double entry accounting system is:

An accounting system that is useful for small business.
An accounting system involving all the interested parties of accounting information.
An accounting system in which transactions are recorded from a single aspect.
An accounting system in which business transactions are recorded from dual aspects.

8. One of the items below is not an advantage of the double entry accounting system.

It reflects a comprehensive record of the business.
The accounting system can be used by any type of organization.
It helps to make managerial decisions.
It can handle inflation.

9. The accounting equation can be expressed as follows:

Assets = Income + Expenses
Assets = Liabilities + Drawings
Assets = Liabilities
Assets = Liabilities + Capital

10. One of the items below is not a transaction.

Mr. Smith started a business with cash of $100,000
Received a price list from suppliers
Received interest from the bank amounting to $5,000
Paid salaries of $300

11. A customer returns goods to a supplier. How does the supplier record this in his ledger?

	Accounts to be debited	Accounts to be credited
A	Customer	Purchase returns
B	Customer	Sales returns
C	Purchase returns	Customer
D	Sales returns	Customer

12. A company buys goods on credit from the private fund of a proprietor. What will the effect be on assets and liabilities?

	Effect on assets	Effect on liabilities
A	Reduce bank	Reduce creditors
B	Increase cash	No effect
C	Increase cash	Decrease loan
D	Increase stock	Increase capital

13. Identify the incorrect statement:

		Effect on
		Assets	Liabilities
A	Paid creditors by check	- Bank	+ Creditors
B	Bought goods on credit	+ Stock	+ Creditors
C	Received cash from debtor	+ Cash, - Debtors
D	Sold goods for cash	+ Cash, - Stock