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:

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 Debitcomes 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 wordCredit 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:

AccountsIncrease or DecreaseDebit or Credit
AssetsIncreaseDebit
AssetsDecreaseCredit
LiabilitiesIncreaseCredit
LiabilitiesDecreaseDebit
Owner’s EquityIncreaseCredit
Owner’s EquityDecreaseDebit
IncomeIncreaseCredit
IncomeDecreaseDebit
ExpensesIncreaseDebit
ExpensesDecreaseCredit

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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