A Double-Entry Accounting System Is an Accounting System

question 170

Multiple Choice

A double-entry accounting system is an accounting system:

• A) That may only be used if T-accounts are used.
• B) That insures that errors never occur.
• 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 records the effects of transactions and other events in at least two accounts with equal debits and credits.
• E) That records each transaction twice.

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Definitions:

Inventories

Quantifiable goods or materials that a business holds with the intent of selling them in the course of business operations, constituting a significant portion of a company's assets.

Credit Terms

Conditions under which credit will be extended to a borrower, detailing repayment amounts and the timeframe of repayment.

Discount

Generally a reduction in price or value. In finance, a reduction in the present value of a future sum due to the action of interest.

Net

Refers to the amount remaining after all deductions are made, such as taxes, expenses, and costs.