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      Question

      The primary rule of double-entry book-keeping

      is:
      A Assets = Liabilities Correct Answer Incorrect Answer
      B For every debit, there is a corresponding and equal credit Correct Answer Incorrect Answer
      C Revenue is recognized when earned Correct Answer Incorrect Answer
      D Expenses are matched with revenues Correct Answer Incorrect Answer
      E The business is a separate entity from its owners Correct Answer Incorrect Answer

      Solution

      Double-entry bookkeeping is the foundational system for modern accounting. Its core principle is that every financial transaction has two equal and opposite effects, recorded as a debit in one account and a credit in another. This ensures the fundamental accounting equation (Assets = Liabilities + Equity) always remains in balance. While Option A is the accounting equation itself, Option B describes the mechanism by which that equation is maintained. Options C and D are specific accounting principles (Revenue Recognition and Matching Concept), and Option E is the Business Entity Concept.

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