ACCA FA double-entry practice
Double entry becomes easier when you classify each account before deciding whether it increases or decreases.
- ✓Debit increases in assets, expenses, and drawings
- ✓Credit increases in liabilities, income, and capital
- ✓Every transaction keeps total debits equal to total credits
Worked question
A business buys inventory for cash. Which entry is correct?
- A. Debit cash, credit inventory
- B. Debit inventory, credit cash
- C. Debit purchases returns, credit cash
- D. Debit cash, credit purchases
Answer: Debit inventory, credit cash
Inventory is an asset that increases, so it is debited. Cash is an asset that decreases, so it is credited.
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