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Quizzes > Business & Finance

Double Entry Test: Check Your Bookkeeping Basics

Quick, free quiz to practice double entry bookkeeping. Instant results.

Editorial: Review CompletedCreated By: Karl LloydUpdated Aug 26, 2025
Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting a quiz on Double Entry Bookkeeping Knowledge Test

Use this quiz to check your double-entry bookkeeping skills, practice debits and credits, and spot gaps before class or work. Answer 15 quick questions and get instant feedback on where to review. For more drills, try the journal entry quiz, the debits and credits quiz, or the basic accounting quiz.

Which accounts are affected when a business buys inventory on credit under the perpetual system?
Debit Purchases; Credit Accounts Payable
Debit Inventory; Credit Accounts Payable (correct - increases asset and liability)
Debit Accounts Receivable; Credit Inventory
Debit Cost of Goods Sold; Credit Accounts Payable
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When the owner invests cash into the business, what is the correct double-entry?
Debit Owner's Equity; Credit Cash
Debit Cash; Credit Revenue
Debit Revenue; Credit Cash
Debit Cash; Credit Owner's Equity/Capital (correct - increases asset and equity)
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Which side increases an expense account in double-entry bookkeeping?
Debit (correct - expenses have normal debit balance)
Credit
Either side, depending on account type
Neither; expenses are memo-only
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A company pays a supplier $2,000 toward an outstanding balance. What is the correct entry?
Debit Inventory $2,000; Credit Accounts Payable $2,000
Debit Cash $2,000; Credit Accounts Payable $2,000
Debit Expense $2,000; Credit Cash $2,000
Debit Accounts Payable $2,000; Credit Cash $2,000 (correct - reduces liability and cash)
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How is prepaid insurance adjusted after one month of use?
Debit Cash; Credit Insurance Expense
Debit Insurance Payable; Credit Insurance Expense
Debit Insurance Expense; Credit Prepaid Insurance (correct - recognizing expense)
Debit Prepaid Insurance; Credit Insurance Expense
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What is the correct double-entry to record monthly straight-line depreciation on equipment?
Debit Depreciation Expense; Credit Accumulated Depreciation (correct - expense and contra-asset)
Debit Depreciation Expense; Credit Equipment
Debit Equipment; Credit Depreciation Expense
Debit Accumulated Depreciation; Credit Cash
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Which entry records accrued wages of $1,500 at month-end?
Debit Wages Payable $1,500; Credit Wages Expense $1,500
Debit Wages Expense $1,500; Credit Wages Payable $1,500 (correct - expense incurred, liability accrued)
Debit Cash $1,500; Credit Wages Expense $1,500
Debit Prepaid Wages $1,500; Credit Cash $1,500
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Unearned revenue becomes earned as services are delivered. What is the adjusting entry?
Debit Unearned Revenue; Credit Service Revenue (correct - reduce liability, recognize revenue)
Debit Service Revenue; Credit Unearned Revenue
Debit Cash; Credit Service Revenue
Debit Accounts Receivable; Credit Unearned Revenue
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A credit sale of $4,000 plus 5% sales tax is made under perpetual inventory. What is the revenue-side entry?
Debit Accounts Receivable $4,000; Credit Sales Revenue $4,200
Debit Sales Tax Expense $200; Credit Sales Revenue $4,200
Debit Cash $4,200; Credit Sales Revenue $4,200
Debit Accounts Receivable $4,200; Credit Sales Revenue $4,000; Credit Sales Tax Payable $200 (correct)
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What is the correct entry for a customer payment within discount period: $1,000 invoice, 2% discount?
Debit Cash $1,000; Credit Sales Discounts $20; Credit Accounts Receivable $980
Debit Cash $980; Debit Sales Discounts $20; Credit Accounts Receivable $1,000 (correct - recognizes contra-revenue)
Debit Accounts Receivable $20; Credit Sales Discounts $20
Debit Cash $980; Credit Sales Revenue $20; Credit Accounts Receivable $1,000
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A suspense account is used temporarily when which situation occurs?
To store cash until deposit
To record accumulated depreciation
To record all small expenses
There is an imbalance or uncertainty pending investigation (correct - holds unclassified/imbalanced items)
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Freight-in paid on purchases for resale is typically recorded as what under a perpetual system?
Debit Inventory (correct - part of inventory cost)
Debit Cost of Goods Sold
Credit Inventory
Debit Freight-out expense
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How is a purchase discount received (2/10, n/30) recorded under the perpetual inventory system?
Debit Cash; Credit Inventory; Credit Accounts Payable
Debit Inventory; Credit Accounts Payable
Debit Purchases Discount; Credit Accounts Payable
Debit Accounts Payable; Credit Inventory; Credit Cash (correct - discount reduces inventory cost)
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Under an imprest petty cash system, how is the fund replenished at period-end?
Debit appropriate expenses and shortages; Credit Cash (correct - to restore fund to set level)
Debit Petty Cash; Credit Expenses
Debit Revenue; Credit Petty Cash
Debit Cash; Credit Petty Cash
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What is the purpose of reversing entries?
To undo all adjusting entries permanently
To simplify recording of subsequent cash transactions for prior accruals (correct)
To close revenue and expense accounts
To correct trial balance errors
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A year-end count finds inventory shrinkage under perpetual inventory. What entry records it?
Debit Inventory; Credit Sales Revenue
Debit Sales Returns; Credit Inventory
Debit Inventory; Credit COGS
Debit Inventory Shrinkage (or COGS); Credit Inventory (correct - write down inventory)
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Under the allowance method, writing off a specific uncollectible account requires what entry?
Debit Bad Debt Expense; Credit Accounts Receivable
Debit Allowance for Doubtful Accounts; Credit Accounts Receivable (correct - no effect on net income)
Debit Cash; Credit Allowance for Doubtful Accounts
Debit Accounts Receivable; Credit Bad Debt Expense
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What is the effect of capitalizing borrowing costs that meet criteria under applicable standards?
Debit Retained Earnings; Credit Cash
Debit Interest Expense; Credit Asset
Debit Asset under construction; Credit Interest Payable or Cash (correct - part of asset cost)
No entry permitted
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Which entry records impairment of inventory to net realizable value under perpetual inventory?
Debit Loss on Inventory Write-down; Credit Inventory (correct - lower of cost and NRV)
Debit Inventory; Credit Loss on Inventory
Debit Allowance for Doubtful Accounts; Credit Inventory
Debit COGS; Credit Sales Revenue
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A company issues shares for non-cash equipment valued reliably. What is the entry?
Debit Equipment; Credit Revenue
Debit Share Capital; Credit Equipment
Debit Equipment; Credit Share Capital (correct - equity for asset at fair value)
Debit Cash; Credit Share Capital
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Learning Outcomes

  1. Apply double-entry principles to maintain balanced accounts
  2. Identify correct debit and credit entries in transactions
  3. Analyse trial balances to spot accounting discrepancies
  4. Demonstrate accurate ledger posting with proper classification
  5. Evaluate financial statements for bookkeeping accuracy
  6. Master reconciliation techniques for precise account matching

Cheat Sheet

  1. Understand the Accounting Equation - Think of this like a seesaw balancing act: Assets always dance with Liabilities plus Equity to keep your books in perfect symmetry. It's the heart of double-entry bookkeeping, ensuring that every debit has its matching credit. Master this, and you'll spot errors with a single glance.
  2. Master Debits and Credits - Debits and credits are the yin and yang of accounting magic. Remember DEAD CLIC to see which way the numbers flow: Debit for Expenses, Assets, Drawings; Credit for Liabilities, Income, Capital. Get comfy with this dance, and you'll record transactions like a pro.
  3. Record Transactions in T-Accounts - Picture your accounts as giant T shapes - debits on the left leg, credits on the right. This visual trick transforms abstract numbers into a clear story of how transactions shift balances. It's like organizing your sock drawer by colors: neat and satisfying.
  4. Utilize Journals for Initial Entries - Think of journals as your transaction diary: every purchase, sale, or payment gets its moment in the spotlight before moving to the grand ledger stage. This keeps mistakes bottled up early, so your ledgers stay tidy and error-free. Journaling first means fewer headaches at month-end.
  5. Post to the General Ledger - Once your transactions cozy up in journals, it's time to introduce them to the general ledger where all accounts mingle. This central hub collects every balance and sets the stage for financial statements. Think of it as the main character in your accounting story.
  6. Prepare a Trial Balance - Draft a trial balance to make sure debit totals high-five credit totals. Finding a mismatch here tells you something's out of whack before you even dream of writing financial statements. It's your error-detective tool in disguise.
  7. Adjust Entries for Accuracy - Adjusting entries tweak your books for things like depreciation or accrued expenses, so the numbers reflect reality. Skipping this is like forgetting to set your watch to daylight savings - your time (and reports) are off. Include these tweaks for picture-perfect statements.
  8. Compile Financial Statements - With an adjusted trial balance in hand, you can build your income statement, balance sheet, and cash flow statement. These documents are like your business's report card and health check rolled into one. Present them clearly and you'll impress both bosses and bankers.
  9. Reconcile Bank Statements - Matching your books against bank statements is like confirming a pizza delivery - every slice (or cent) needs to be accounted for. This routine keeps sneaky errors and unauthorized transactions from crashing your party. Do it regularly to keep your records legit.
  10. Stay Consistent with Accounting Periods - Picking and sticking to clear reporting periods (monthly, quarterly, yearly) lets you track trends like a pro detective. Consistency is the secret sauce for comparing results over time. This way, surprises are fun, not financial.
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