Debits and Credits Quiz 2 Financial Accounting Quiz On Feb 28, 2026 Share Follow the Facebook page Accountants Quiz and join the group Accounting Quiz Debits and Credits Quiz 2 Multiple Choice questions 50 questions in 25 minutes Pass Score 70% 1 / 50 When supplies are used up, which account is debited? Supplies Expense Inventory Cash Supplies Supplies Expense is debited to reflect the cost of supplies consumed in the business. 2 / 50 When a company borrows money from a bank, which account is credited? Accounts Payable Loan Payable Interest Payable Cash Loan Payable is credited to recognize the liability created by borrowing funds. 3 / 50 Which of the following is true for a revenue account? It normally has a credit balance It is an asset account It is increased by debits It is decreased by credits Revenue accounts typically have a credit balance, reflecting income earned by the business. 4 / 50 Which account is debited when an expense is paid in cash? Capital Accounts Payable Expense Cash The Expense account is debited to record the cost, reducing equity. 5 / 50 When equipment is sold for cash, which account is debited? Equipment Accounts Receivable Sales Cash Cash is debited to reflect the increase in cash from the sale of equipment 6 / 50 Which of the following is debited when a company receives a loan? Cash Loan Payable Interest Expense Accounts Payable Cash is debited to reflect the increase in cash when a loan is received 7 / 50 Which of the following is debited when inventory is purchased for cash? Cost of Goods Sold Inventory Accounts Payable Cash The Inventory account is debited to increase the asset as more inventory is acquired. 8 / 50 What happens to the Cash account when it is debited? It depends on the type of transaction It decreases No change It increases Debiting the Cash account increases the cash balance as more cash is being added. 9 / 50 What happens to the Capital account when additional investments are made by the owner? It is debited It increases It decreases No change The Capital account is credited, increasing the owner's equity when more capital is invested. 10 / 50 Which account is credited when a customer pays their outstanding balance? Accounts Receivable Cash Interest Revenue Sales Accounts Receivable is credited to decrease the balance, reflecting payment received. 11 / 50 What happens to the Inventory account when inventory is sold? It decreases It increases It depends on the type of sale It remains unchanged The Inventory account is credited, reducing its balance as goods are sold 12 / 50 Which account is credited when office supplies are purchased on account? Cash Accounts Payable Inventory Office Supplies Accounts Payable is credited to recognize the obligation to pay for the office supplies in the future. 13 / 50 When a company earns interest on its bank account, which account is credited? Accounts Payable Cash Interest Revenue Accounts Receivable Interest Revenue is credited to reflect the income earned from interest. 14 / 50 Which of the following accounts typically has a credit balance? Cash Inventory Expenses Capital The Capital account usually has a credit balance, representing the owner’s equity in the business. 15 / 50 If a company purchases land, which account is debited? Expenses Land Capital Cash The Land account is debited to record the acquisition of the land as an asset 16 / 50 Which account is credited when an invoice is sent to a customer for services rendered? Service Revenue Cash Unearned Revenue Accounts Receivable Service Revenue is credited to record the income earned from providing services. 17 / 50 Which account is credited when wages are paid to employees? Accounts Payable Cash Wages Expense Wages Payable Cash is credited as it decreases when wages are paid. 18 / 50 What is the normal balance of a liability account? Credit Both Debit and Credit Debit Neither Liabilities normally carry a credit balance, reflecting amounts owed by the company. 19 / 50 If a business owner withdraws cash for personal use, which account is debited? Cash Drawing Accounts Payable Owner's Equity Withdrawals for personal use reduce the owner’s equity, and the Drawing account is debited. 20 / 50 When revenue is earned on account, which account is credited? Accounts Receivable Cash Revenue Unearned Revenue Revenue is credited to recognize the income earned by the business. 21 / 50 Which account is debited when a business purchases inventory on account? Inventory Cash Cost of Goods Sold Accounts Payable Inventory is debited to reflect the acquisition of goods that will be sold to generate revenue 22 / 50 In a double-entry system, which side is the debit side? Right Left Bottom Top In the double-entry accounting system, the left side of an account is the debit side. 23 / 50 Which of the following accounts is increased by a debit? Revenue Expenses Capital Accounts Payable Expenses increase with a debit, reducing the overall equity in the business. 24 / 50 Which of the following is true about the double-entry accounting system? Both (Every transaction affects two or more accounts) and (Debits must always equal credits) Debits must always equal credits. It only records cash transactions. Every transaction affects two or more accounts. The double-entry system requires that each transaction affects at least two accounts and that total debits equal total credits. 25 / 50 Which account is credited when a service is provided on credit? Cash Accounts Receivable Unearned Revenue Service Revenue Service Revenue is credited to record the income earned from providing the service. 26 / 50 Which of the following accounts is credited when a dividend is declared? Cash Retained Earnings Revenue Dividends Payable Dividends Payable is credited to record the liability created by declaring a dividend. 27 / 50 When a business receives payment in advance from a customer, which account is credited? Unearned Revenue Accounts Receivable Revenue Cash Unearned Revenue is credited to record the liability until the service or product is delivered. 28 / 50 Which of the following is true for a credit entry? It decreases liabilities It increases assets It increases expenses It increases liabilities A credit entry typically increases liabilities, indicating more debt or obligations. 29 / 50 Which of the following is credited when cash is received from a customer? Sales Accounts Receivable Cash Accounts Payable When cash is received from a customer, the Accounts Receivable is credited to decrease the balance as the debt has been settled. 30 / 50 What is the effect on the capital account when it is credited? It decreases No effect It depends on the transaction It increases Crediting the capital account increases it, indicating an increase in the owner’s equity. 31 / 50 Which account is debited when a company's insurance premium is paid in advance? Insurance Expense Cash Accounts Payable Prepaid Insurance Prepaid Insurance is debited to record the payment made in advance, treated as an asset until used 32 / 50 What happens to the Accounts Payable account when it is debited? It increases It depends on the transaction It decreases No change Debiting Accounts Payable reduces the balance, indicating a payment has been made. 33 / 50 If a company purchases equipment on credit, which account is debited? Capital Cash Equipment Accounts Payable Equipment is debited to reflect the addition of the asset to the company’s books. 34 / 50 Which of the following accounts would be debited when a dividend is paid? Retained Earnings Revenue Dividends Payable Cash Dividends Payable is debited to reduce the liability when the dividend is paid out. 35 / 50 When an expense is incurred but not yet paid, which account is credited? Expenses Cash Accounts Payable Revenue Accounts Payable is credited to recognize the obligation to pay the expense in the future. 36 / 50 Which of the following accounts typically has a debit balance? Revenue Capital Drawings Accounts Payable The Drawings account usually has a debit balance as it represents withdrawals by the owner. 37 / 50 Which account is credited when a business owner withdraws cash for personal use? Drawings Accounts Payable Owner's Equity Cash Cash is credited as it decreases when the owner withdraws money. 38 / 50 What happens to the Retained Earnings account when dividends are declared? No change It increases It is debited It decreases Retained Earnings decreases when dividends are declared, reducing the amount available for reinvestment. 39 / 50 Which account is credited when goods are sold on credit? Inventory Sales Accounts Receivable Cash Sales are credited when goods are sold, reflecting an increase in revenue. 40 / 50 Which of the following transactions would increase a liability? Purchase of equipment with cash Payment to suppliers Borrowing from a bank Receiving cash from customers Borrowing increases liabilities as it represents an obligation to repay the bank 41 / 50 What happens to an expense account when it is debited? It stays the same It increases It is offset by a credit It decreases Debiting an expense account increases the total expense, reflecting higher costs incurred by the business. 42 / 50 Which account typically has a debit balance? Capital Revenue Accounts Payable Expenses Expenses typically have a debit balance, reflecting the costs incurred by the business. 43 / 50 What is the normal balance of the Capital account? Credit It depends on the transaction Zero Debit The Capital account typically has a credit balance, reflecting the owner’s equity in the business. 44 / 50 When the owner invests additional cash in the business, which account is credited? Accounts Receivable Revenue Cash Owner's Equity Owner’s Equity is credited to reflect the increase in equity from the additional investment. 45 / 50 If a customer returns goods, which account is debited? Sales Returns Inventory Sales Accounts Receivable Sales Returns is debited to reduce the revenue and acknowledge the return of goods. 46 / 50 What happens to the Accounts Receivable account when a customer pays their invoice? No change It increases It decreases It depends on the payment method Accounts Receivable is credited, reducing the balance as the amount owed is paid off. 47 / 50 When an invoice is received for utilities, which account is debited? Utilities Expense Cash Prepaid Utilities Accounts Payable Utilities Expense is debited to record the cost of utilities incurred by the business. 48 / 50 What is the normal balance of the Accounts Receivable account? Credit It depends Debit Zero Accounts Receivable normally have a debit balance, representing amounts owed to the company. 49 / 50 Which of the following is debited when a company pays off a loan? Accounts Payable Cash Interest Expense Loan Payable Loan Payable is debited to reduce the liability when the loan is paid off. 50 / 50 When a company pays rent in advance, which account is debited? Accounts Payable Cash Prepaid Rent Rent Expense Prepaid Rent is debited to record the payment made in advance for rent, which is considered an asset until used. Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback accounting debits and creditsaccounting debits and credits cheat sheetaccounting equation debits and credits
