Principles And Rules of Double Entry - SS1 Accounting Past Questions and Answers - page 1
What is the accounting equation?
Assets = Liabilities - Equity
Assets = Liabilities + Equity
Assets - Liabilities = Equity
What happens if the total amount of debits does not equal the total amount of credits?
The accounting records are considered accurate
The accounting records are considered unreliable
The accounting records are considered incomplete
Which principle of double-entry bookkeeping involves recording each transaction in at least two different accounts?
Principle of consistency
Principle of conservatism
Principle of double entry
What is the purpose of the principle of consistency in double-entry bookkeeping?
To ensure the accounting records are accurate and up-to-date
To ensure the same accounting methods and procedures are used consistently over time
To record the lower value or amount when there are uncertainties or doubts
What is the principle of conservatism in double-entry bookkeeping?
Recording each transaction in at least two different accounts
Using the same accounting methods and procedures consistently over time
Being conservative and recording the lower value or amount when there are uncertainties or doubts
What is the accounting equation and why is it important in double-entry bookkeeping?
The accounting equation is Assets = Liabilities + Equity. It is important in double-entry bookkeeping because it ensures that the total amount of debits always equals the total amount of credits, which helps to ensure the accounting records are accurate and balanced.
Why is the principle of conservatism important in double-entry bookkeeping?
The principle of conservatism is important in double-entry bookkeeping because it helps to ensure that the accounting records are accurate and reliable. By recording the lower value or amount when there are uncertainties or doubts, it avoids overvaluing assets or underestimating liabilities, which could lead to misleading financial information.