Indicate whether each of the following statements is true or false.________ a) Every journal entry includes at least one debit and one credit.________ b) The double-entry accounting format always records two separate events simultaneously.________ c) The double-entry system requires that total debits equal total credits.________ d) When an asset decreases in a double-entry system, a stockholders' equity account may also decrease.________ e) The double entry system ensures the accuracy of a company's accounting records.

Question

What will be an ideal response?

Answer 1

a) T b) F c) T d) T e) F

a) This is true. In a double-entry system, every journal entry includes at least one debit and one credit entry.
b) This is false. The double-entry format records each event separately although there are at least two components in each event.
c) This is true. Every journal entry must include equal debits and credits.
d) This is true. Thus, a decrease to an asset account may also include a decrease to a stockholders' equity account. For example, paying cash for salaries decreases assets (cash) with a credit and increases expenses (salaries expense). The debit to salaries expense actually decreases stockholders' equity (retained earnings).
e) This is false. Erroneous entries may still be entered into the accounting records, such as the following: the failure to record transactions; misclassifications, such as debiting the wrong account; or, incorrectly recording the amount of a transaction.