In a double-entry accounting system: A) A credit entry records a decrease in an accountB) All accounts have normal debit balancesC) Liabilities, common stock, and expense accounts all have normal credit balances D) A debit entry is recorded on the left side of an account

Answered: In a double-entry accounting system:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In a double-entry accounting system:

A)	A credit entry records a decrease in an account

B)	All accounts have normal debit balances

C)	Liabilities, common stock, and expense accounts all have normal credit balances

D)	A debit entry is recorded on the left side of an account

Expert Solution

Step 1

Double Entry Accounting System

Every activity is documented in two accounts—one for a debit and one for a credit—in a double-entry bookkeeping system. For instance, if a company takes out a $10,000 loan, $10,000 is deducted from the cash (asset) account and $10,000 is added to the account for outstanding loans (obligation). Double-entry accounting is a technique of recordkeeping that ensures an equilibrium between debits and credits by affecting at least two accounts with each occurrence. This strategy lessens the possibility of bookkeeping mistakes. Double-entry accounting is a method of bookkeeping used by organizations.

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