Top 20 Questions and Answers- Double Entry System

Today, we will learn the Top 20 Questions and Answers-Double Entry System. At the end of the article, you will get a basic idea of the double-entry system.

It will help you to enhance your accounting skill and do well on any competitive exam.

So let’s get started.

Questions and Answers- Double Entry System

Question-01: What is a double-entry system?

Answer: The procedure used to record dual entity transactions to prepare accounts properly is called the Double Entry System.

Question-02: What are the Principles or features of the double entry system?

Answer: The Principles or features of the Double Entry System are as follows:

Each transaction must have a dual aspect
Each transaction must have one debtor and one creditor
Exchanged Equal amount
Making Debit and Credit
Scientific accounting system

Question-03: What are the advantages of the double-entry system?

Answer: The advantages of the double-entry system are as follows:

Ascertain profit–loss
Verifying arithmetic accuracy
Complete account
Ascertain financial position
Finding fault & falsification and means of avoiding the same
Cost control

Question-04: What are the limitations or disadvantages or demerits of the double-entry system?

Answer: The limitations or disadvantages or demerits of the double-entry system are as follows:

The complexity of the accounting system
Need an experienced person
Loss of time labour and cost
Probability of errors
Increase the volume of work

Question-05: Which books of accounts are kept under the double-entry system?

Answer: The books of accounts are kept under a double-entry system are as follows:

Purchase Journal
Sales Journal
Purchase Return Journal
Sales Return Journal
Cash Receipt Journal
Cash Payment Journal
Journal Proper
Ledger

Question-06: Which book first record the transactions under a double-entry system?

Answer: Journal book.

Question-07: Why the double-entry system is called a scientific method?

Answer: The mathematical accuracy of the account can be easily verified by keeping the account in the double-entry method. So, it is said that the double-entry system is a scientific method.

Question-08: What is the basis of current accounting?

Answer: Double Entry System

Question-09: What is debit?

Answer: Debit indicates the left side of an account. So, the account in which the details of transactions are recorded on the left-hand side is called a debit account.

Question-10: The word ‘Debit’ comes from which word?

Answer: The word ‘Debit’ comes from the Latin word “Debitum”. It means what is due or owed.

Question-11: What is credit?

Answer: Credit indicates the right side of an account. So, the account in which the details of transactions are recorded on the right-hand side is called a credit account.

Question-12: The word ‘Credit’ comes from which word?

Answer: The word ‘Credit’ comes from the Latin word ‘Credited’. It means what is trusted.

Question-13: How many methods are used for determining the debit and credit of transactions? What are they?

Answer: Two (2) methods are used for determining the debit and credit of transactions, which are as follows:

Rules-based on classes of accounts
Rules-based on equation method

Question-14: How to identify debit and credit for a personal account?

Answer: The formula for identifying debit and credit for a personal account is as follows:

The receiver of the benefit–Debit
The giver of the benefit—Credit

Question-16: How to identify Debit and Credit under the equation method?

Answers: The formula for identifying debit and credit under the equation method is as follows:

Accounts	Increase or Decrease	Debit or Credit
Assets	Increase	Debit
Assets	Decrease	Credit
Liabilities	Increase	Credit
Liabilities	Decrease	Debit
Owner’s Equity	Increase	Credit
Owner’s Equity	Decrease	Debit
Income	Increase	Credit
Income	Decrease	Debit
Expenses	Increase	Debit
Expenses	Decrease	Credit

Question-17: When is an account completed?

Answer: An account is completed when transactions are recorded in two aspects (debit aspect and credit aspect)

Question-18: What kind of accounting system is called a Double entry system?

Answer: Double entry system is a complete, Reliable, and Scientific accounting system.

Question-19: What is a single entry system?

Answer: The single entry system is an accounting method that records only cash and personal accounts.

Question-20: What is the difference between a Double-entry and Single entry system?

Answer: Double entry system is a scientific method of accounting that is based on the principles and rules of accounting. On the other hand, a Single entry system is an incomplete and non-compliant procedure. It is an immature accounting system created by the ingenious method of an inexperienced and incompetent accountant.

I hope you understand the concepts of the double-entry system at the end of the article. Read these Top “20” Questions and Answers- Double Entry System regularly and increase your accounting knowledge.

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