Which of the Following Statements Is True Regarding Simple and Compound

question 58

Multiple Choice

Which of the following statements is true regarding simple and compound entries?

• A) Simple entries can be prepared by anyone whereas compound entries need to be prepared by a skilled accountant.
• B) Simple entries are recorded on the income statement whereas compound entries are recorded on the statement of financial position.
• C) Simple entries involve one account, whereas compound entries involved 2 or more accounts.
• D) An example of a compound entry would be the purchase of a machine for $400 cash and a $2,000 note payable.

---

Definitions:

Double-Entry System

A fundamental principle of accounting that requires every financial transaction to be recorded in at least two accounts: one debit and one credit, ensuring the accounting equation is always balanced.

T Account

A visual representation used in accounting to depict the debit and credit sides of an account for easy visualization and analysis.

T Account

A visual representation used in accounting to show the effect of transactions on the balance of accounts, featuring a T-shaped format.

Debit Balance

A financial account balance where debits are greater than credits.