A Double-Entry Accounting System Is an Accounting System

question 201

Multiple Choice

A double-entry accounting system is an accounting system:

• A)That records each transaction twice.
• B)That records the effect of each transaction in at least two accounts with equal debits and credits.
• C)In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
• D)That allows total credits to be greater than total debits.
• E)That allows total debits to be greater than total credits.

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Definitions:

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.

Long-Term Investments

Assets that a company intends to hold for more than one year, including stocks, bonds, and real estate.

Bonds Retired

The process of redeeming bonds before their maturity date, effectively removing them from circulation.

Old Equipment

Refers to machinery or tools that have been used over an extended period and may now be considered outdated or less efficient.