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
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|
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.
You can also read: