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

Quizplus · Accepted Answer

b)False c)True d)True e)F. 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.

Indicate Whether Each of the Following Statements Is True or False