How Many of the Following Statements About the Double-Entry System

question 43

Multiple Choice

How many of the following statements about the double-entry system are true?
i. The accounting equation should stay in balance
ii. At least one account should be debited and one account credited
iii. Credits should always be entered into the journal before debits

• A) 3
• B) 2
• C) 1
• D) 0

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Definitions:

Asset Test

A means of determining an individual's or entity's ability to meet its financial obligations by comparing its liquid assets against its current liabilities.

Operating Segments

Elements of a corporation for which distinct financial data is obtainable, which the chief operating decision maker reviews routinely to determine resource allocation and to evaluate performance.

Reporting Tests

Procedures or checks utilized to ensure financial information is accurate, complete, and in compliance with regulations.

Quantitative Thresholds

Fixed numerical limits or criteria used to trigger certain actions or classify objects in financial and statistical contexts.