Double-Entry Accounting Is an Accounting System

question 223

Multiple Choice

Double-entry accounting is an accounting system:

• A)That records each transaction twice.
• B)That records the effects of transactions and other events in at least two accounts with equal debits and credits.
• C)In which the impact of each transaction is checked twice to ensure there are no errors.
• D)That may only be used if T-accounts are used.
• E)That records the effects of transactions on at least two financial statements.

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Definitions:

Merchandising Company

A business that purchases finished goods for resale, aiming to make a profit without changing the form of the goods.

Cost of Goods Sold

The direct costs related to the production of the goods that a company sells, including materials and labor.

Indirect Manufacturing Cost

Costs that are not directly traceable to specific units produced, such as utilities or rent for manufacturing facilities.

Relevant Range

The scope of activity within which the assumptions about fixed and variable cost behaviors hold true.