Debits and Credits Practice Quiz Questions and Answers

Debits and Credits Practice Quiz Questions and Answers

Understanding debits and credits is a cornerstone of mastering financial accounting. These foundational concepts impact every transaction, journal entry, and financial statement. Whether you’re new to accounting or preparing for a professional certification, this set of Debits and Credits Practice Quiz Questions and Answers is designed to build your confidence and competence in double-entry bookkeeping.

This carefully structured quiz offers a comprehensive review of how debits and credits function within the accounting cycle. It challenges you to not just memorize the rules but apply them in real-life scenarios across assets, liabilities, equity, revenue, and expenses. It’s a practical, focused resource to test your knowledge and improve your accuracy in recording and analyzing financial transactions.

What You’ll Learn and Review

These quiz questions dive into the mechanics and logic of the accounting system. By working through this set, you’ll solidify your understanding of:

• The Double-Entry Accounting System: Learn how every transaction affects at least two accounts.
• Debit and Credit Rules for Different Account Types: Practice applying rules to assets, liabilities, equity, revenue, and expense accounts.
• Normal Balances: Understand what it means when an account has a normal debit or credit balance.
• Common Journal Entries: Get hands-on practice recording sales, purchases, salaries, interest, and more.
• Trial Balance Preparation: Ensure the books are in balance by verifying debits equal credits.
• Error Identification: Spot and correct common recording mistakes or entry omissions.

Each question is crafted to replicate situations you’ll face in exams, interviews, or day-to-day work in accounting and bookkeeping roles.

Why This Practice Quiz Is Effective

What sets these Debits and Credits Practice Quiz Questions and Answers apart is their focus on clarity, application, and retention. The questions aren’t just theoretical—they reflect how debits and credits actually appear in accounting records. You’ll move beyond textbook learning into practical use.

Whether you’re preparing for an exam or reviewing basic accounting knowledge, this quiz will sharpen your decision-making and accuracy when recording financial data. Clear answer explanations are included, helping you correct misconceptions and reinforce the correct approach.

This quiz acts as both a study guide and a self-assessment tool, allowing you to gauge how well you understand the building blocks of accounting.

Who This Quiz Is For

This quiz is ideal for:

• Accounting and bookkeeping students preparing for course assessments
• CPA, CMA, and ACCA exam candidates revising double-entry concepts
• Beginner bookkeepers and small business owners learning to manage their own records
• Tutors and instructors seeking reliable teaching material
• Finance professionals refreshing their foundational accounting skills

Whether you’re at the start of your accounting journey or revisiting the essentials, these quiz questions offer targeted, efficient practice that delivers real results.

FAQ

What topics are covered in the Debits and Credits Practice Quiz Questions and Answers?

Topics include double-entry bookkeeping, normal balances, account classification, journal entries, and basic trial balance principles.

Is this quiz suitable for beginners?

Yes, it’s designed for both newcomers and intermediate learners who need to solidify their understanding of core accounting mechanics.

Does this quiz help with professional exam prep like CPA or ACCA?

Absolutely. These are high-yield concepts tested in most major accounting certifications, and this quiz is built to reflect real exam scenarios.

Are answer explanations included?

Yes, each answer includes a clear explanation so you can understand the reasoning and correct any misunderstandings.

Can this quiz help with real-world bookkeeping tasks?

Definitely. By mastering debits and credits, you’ll be equipped to accurately record and review transactions in real-world accounting systems.

Questions

What is a debit entry?

A) An entry that increases assets and expenses

B) An entry that decreases assets and increases revenue

C) An entry that decreases liabilities and increases assets

D) An entry that records revenue and liabilities

Which of the following accounts normally has a credit balance?

A) Cash

B) Accounts Payable

C) Equipment

D) Prepaid Expenses

When cash is received, which account is debited?

A) Revenue

B) Cash

C) Accounts Receivable

D) Accounts Payable

A credit entry is used to:

A) Increase assets and expenses

B) Increase liabilities and revenue

C) Decrease liabilities and revenue

D) Increase equity and expenses

Which of the following accounts would increase with a debit?

A) Sales Revenue

B) Accounts Payable

C) Equipment

D) Common Stock

Which of the following is true about the double-entry system?

A) It requires only one entry per transaction.

B) Every transaction affects two accounts.

C) It only applies to asset accounts.

D) Debits and credits do not need to balance.

What is the normal balance for an expense account?

A) Debit

B) Credit

C) Zero

D) Mixed

If a company receives cash for services performed, which accounts are affected?

A) Debit Cash, Credit Revenue

B) Debit Accounts Receivable, Credit Cash

C) Debit Revenue, Credit Cash

D) Debit Revenue, Credit Accounts Receivable

An increase in an asset account is recorded as:

A) Credit

B) Debit

C) None of the above

D) Both debit and credit

Which of these accounts typically has a debit balance?

A) Unearned Revenue

B) Notes Payable

C) Dividends

D) Sales Revenue

If a company buys inventory on credit, what is the correct journal entry?

A) Debit Cash, Credit Inventory

B) Debit Inventory, Credit Accounts Payable

C) Debit Accounts Payable, Credit Cash

D) Debit Cash, Credit Accounts Payable

What happens when a liability account increases?

A) A debit is recorded.

B) A credit is recorded.

C) A debit or a credit is irrelevant.

D) It remains unchanged.

Which of the following statements is true?

A) Debits always increase liabilities.

B) Credits always increase expenses.

C) Debits always increase assets.

D) Credits always decrease assets.

A company pays rent for the month. The journal entry is:

A) Debit Rent Expense, Credit Cash

B) Debit Cash, Credit Rent Expense

C) Debit Prepaid Rent, Credit Cash

D) Debit Cash, Credit Rent Payable

Which account will normally have a credit balance?

A) Prepaid Insurance

B) Salaries Payable

C) Cash

D) Rent Expense

If a company pays off a portion of its debt, which accounts are involved?

A) Debit Cash, Credit Accounts Payable

B) Debit Accounts Payable, Credit Cash

C) Debit Expenses, Credit Accounts Payable

D) Debit Accounts Receivable, Credit Cash

What type of account is Sales Revenue?

A) Asset

B) Liability

C) Equity

D) Revenue

What type of account is Accumulated Depreciation?

A) Asset

B) Liability

C) Contra-asset

D) Revenue

Which of these accounts would normally have a credit balance?

A) Cash

B) Accounts Receivable

C) Sales Revenue

D) Supplies

When a company earns revenue but has not yet received cash, which accounts are affected?

A) Debit Revenue, Credit Cash

B) Debit Accounts Receivable, Credit Revenue

C) Debit Cash, Credit Accounts Receivable

D) Debit Revenue, Credit Accounts Payable

Which entry records an increase in an expense?

A) Debit expense, Credit asset

B) Credit expense, Debit liability

C) Debit expense, Credit cash or payable

D) Debit income, Credit liability

If a company pays off its utilities bill, the journal entry would be:

A) Debit Utilities Expense, Credit Accounts Payable

B) Debit Utilities Expense, Credit Cash

C) Debit Accounts Payable, Credit Utilities Expense

D) Debit Cash, Credit Utilities Expense

The normal balance of an owner’s capital account is:

A) Debit

B) Credit

C) Zero

D) Mixed

When inventory is sold for cash, which entry is correct?

A) Debit Cash, Credit Sales Revenue

B) Debit Sales Revenue, Credit Cash

C) Debit Cash, Credit Inventory

D) Debit Sales Revenue, Credit Inventory

What type of account is “Accounts Receivable”?

A) Liability

B) Revenue

C) Asset

D) Expense

What type of account is “Interest Payable”?

A) Asset

B) Liability

C) Expense

D) Revenue

When a company receives an advance payment for a service not yet performed, which entry is correct?

A) Debit Unearned Revenue, Credit Cash

B) Debit Cash, Credit Unearned Revenue

C) Debit Revenue, Credit Accounts Receivable

D) Debit Accounts Receivable, Credit Revenue

Which of the following accounts would decrease with a credit?

A) Cash

B) Supplies

C) Accounts Payable

D) Retained Earnings

When a company buys office supplies on credit, what accounts are affected?

A) Debit Office Supplies, Credit Cash

B) Debit Office Supplies, Credit Accounts Payable

C) Debit Accounts Receivable, Credit Office Supplies

D) Debit Accounts Payable, Credit Office Supplies

If a company incurs an expense but has not paid for it yet, which accounts are involved?

A) Debit Expense, Credit Accounts Payable

B) Debit Accounts Payable, Credit Expense

C) Debit Expense, Credit Cash

D) Debit Cash, Credit Expense

What is the normal balance of a revenue account?

A) Debit

B) Credit

C) Zero

D) Mixed

If a company receives a loan from the bank, which entry is correct?

A) Debit Cash, Credit Loan Payable

B) Debit Loan Payable, Credit Cash

C) Debit Cash, Credit Revenue

D) Debit Revenue, Credit Cash

Which of the following entries would decrease the “Accounts Receivable” account?

A) Debit Cash, Credit Accounts Receivable

B) Debit Accounts Payable, Credit Accounts Receivable

C) Debit Sales Revenue, Credit Accounts Receivable

D) Debit Accounts Receivable, Credit Cash

What happens when a company issues stock for cash?

A) Debit Cash, Credit Stockholders’ Equity

B) Debit Cash, Credit Common Stock

C) Debit Common Stock, Credit Cash

D) Debit Cash, Credit Revenue

When a company declares a dividend, which account is debited?

A) Retained Earnings

B) Dividends Payable

C) Cash

D) Common Stock

What is the normal balance for a revenue account?

A) Debit

B) Credit

C) Zero

D) Mixed

If a company makes a payment to reduce its accounts payable, which accounts are affected?

A) Debit Accounts Payable, Credit Cash

B) Debit Cash, Credit Accounts Payable

C) Debit Accounts Receivable, Credit Cash

D) Debit Cash, Credit Accounts Receivable

What is true about the debit side of an account?

A) It always decreases revenue accounts.

B) It always increases expense accounts.

C) It can either increase or decrease accounts depending on the type.

D) It always decreases asset accounts.

Which of these accounts would typically have a debit balance?

A) Unearned Revenue

B) Equipment

C) Accumulated Depreciation

D) Sales Revenue

Which of the following entries records an increase in owner’s equity?

A) Debit Assets, Credit Revenue

B) Debit Revenue, Credit Assets

C) Debit Revenue, Credit Owner’s Equity

D) Debit Owner’s Equity, Credit Revenue

What happens when an expense account is increased?

A) A credit is recorded.

B) A debit is recorded.

C) The account remains unchanged.

D) None of the above.

If a company pays cash for an asset, what is the journal entry?

A) Debit Asset, Credit Cash

B) Debit Cash, Credit Asset

C) Debit Cash, Credit Accounts Payable

D) Debit Asset, Credit Accounts Payable

What is the effect of a debit on a liability account?

A) It increases the liability.

B) It decreases the liability.

C) It does not affect the liability.

D) It increases revenue.

Which account is debited when a company receives cash from a customer?

A) Sales Revenue

B) Accounts Receivable

C) Cash

D) Accounts Payable

How is a decrease in assets recorded?

A) Debit the asset account.

B) Credit the asset account.

C) Debit the expense account.

D) Credit the revenue account.

What is the effect of recording a sale on credit?

A) Debit Cash, Credit Sales Revenue

B) Debit Accounts Receivable, Credit Sales Revenue

C) Debit Sales Revenue, Credit Accounts Receivable

D) Debit Cash, Credit Accounts Receivable

When an owner withdraws cash from the business, which accounts are involved?

A) Debit Owner’s Draw, Credit Cash

B) Debit Cash, Credit Owner’s Draw

C) Debit Owner’s Equity, Credit Cash

D) Debit Cash, Credit Owner’s Equity

Which type of account is “Prepaid Expenses”?

A) Liability

B) Asset

C) Equity

D) Revenue

When a company recognizes accrued interest expense, which entry is correct?

A) Debit Interest Payable, Credit Interest Expense

B) Debit Interest Expense, Credit Interest Payable

C) Debit Cash, Credit Interest Expense

D) Debit Interest Payable, Credit Cash

Which entry is correct when a company receives cash from a customer for a service performed earlier?

A) Debit Accounts Receivable, Credit Revenue

B) Debit Cash, Credit Accounts Receivable

C) Debit Cash, Credit Service Revenue

D) Debit Service Revenue, Credit Cash

What is the normal balance of an expense account?

A) Debit

B) Credit

C) Zero

D) Mixed

When a company purchases inventory on credit, which of the following entries is correct?

A) Debit Cash, Credit Inventory

B) Debit Inventory, Credit Accounts Payable

C) Debit Accounts Payable, Credit Inventory

D) Debit Accounts Receivable, Credit Inventory

What happens when a company writes off an uncollectible account?

A) Debit Cash, Credit Accounts Receivable

B) Debit Allowance for Doubtful Accounts, Credit Accounts Receivable

C) Debit Accounts Receivable, Credit Allowance for Doubtful Accounts

D) Debit Bad Debt Expense, Credit Cash

Which account is credited when recording a cash payment for an expense?

A) Expense

B) Cash

C) Accounts Payable

D) Accounts Receivable

What is the correct journal entry for a company that receives payment from a customer for services provided on credit?

A) Debit Accounts Payable, Credit Cash

B) Debit Cash, Credit Service Revenue

C) Debit Cash, Credit Accounts Receivable

D) Debit Service Revenue, Credit Cash

What type of account is “Accumulated Depreciation”?

A) Asset

B) Liability

C) Contra Asset

D) Expense

If a company records a purchase of equipment for cash, what is the effect on the accounts?

A) Debit Equipment, Credit Accounts Payable

B) Debit Cash, Credit Equipment

C) Debit Equipment, Credit Cash

D) Debit Accounts Payable, Credit Equipment

What happens when a company receives a bank loan?

A) Debit Cash, Credit Revenue

B) Debit Cash, Credit Loan Payable

C) Debit Accounts Payable, Credit Cash

D) Debit Cash, Credit Accounts Receivable

How is an increase in accounts payable recorded?

A) Debit Accounts Payable, Credit Cash

B) Credit Accounts Payable, Debit Cash

C) Credit Accounts Payable, Debit Expense

D) Debit Accounts Payable, Credit Revenue

Which of the following accounts would normally have a credit balance?

A) Cash

B) Prepaid Expenses

C) Revenue

D) Dividends

When a company makes an adjustment to accrue unpaid wages at the end of the period, which entry is correct?

A) Debit Wages Payable, Credit Wages Expense

B) Debit Wages Expense, Credit Wages Payable

C) Debit Cash, Credit Wages Expense

D) Debit Wages Payable, Credit Cash

What is the effect of receiving cash for a service that was previously earned on credit?

A) Debit Accounts Receivable, Credit Service Revenue

B) Debit Cash, Credit Accounts Payable

C) Debit Cash, Credit Accounts Receivable

D) Debit Service Revenue, Credit Cash

If a company pays off an outstanding debt to a supplier, which accounts are affected?

A) Debit Accounts Payable, Credit Cash

B) Debit Cash, Credit Accounts Payable

C) Debit Supplies, Credit Accounts Payable

D) Debit Accounts Payable, Credit Supplies

Which type of account is “Prepaid Insurance”?

A) Liability

B) Revenue

C) Asset

D) Expense

What type of account is “Rent Revenue”?

A) Asset

B) Liability

C) Revenue

D) Expense

If a company makes a payment to a supplier and the payment is recorded as a credit to Cash, what should be recorded on the debit side?

A) Accounts Receivable

B) Inventory or Supplies

C) Accounts Payable

D) Revenue

When a company purchases a long-term asset and finances the purchase with a note payable, what is the correct journal entry?

A) Debit Note Payable, Credit Cash

B) Debit Equipment, Credit Note Payable

C) Debit Equipment, Credit Cash

D) Debit Cash, Credit Note Payable

When a company pays dividends, what is the journal entry?

A) Debit Cash, Credit Dividends Payable

B) Debit Dividends, Credit Cash

C) Debit Retained Earnings, Credit Dividends Payable

D) Debit Dividends Payable, Credit Retained Earnings

What is the effect of recording a sale with no immediate cash exchange?

A) Debit Accounts Payable, Credit Sales Revenue

B) Debit Accounts Receivable, Credit Sales Revenue

C) Debit Sales Revenue, Credit Cash

D) Debit Cash, Credit Sales Revenue

When a company recognizes earned revenue that was previously recorded as unearned, what is the journal entry?

A) Debit Unearned Revenue, Credit Revenue

B) Debit Revenue, Credit Unearned Revenue

C) Debit Cash, Credit Revenue

D) Debit Revenue, Credit Cash

How is the payment of a long-term loan principal recorded?

A) Debit Loan Payable, Credit Cash

B) Debit Cash, Credit Loan Payable

C) Debit Interest Expense, Credit Cash

D) Debit Cash, Credit Interest Payable

What is the correct entry when a company makes a payment for office supplies on credit?

A) Debit Supplies, Credit Cash

B) Debit Supplies, Credit Accounts Payable

C) Debit Accounts Payable, Credit Supplies

D) Debit Cash, Credit Supplies

What is the journal entry for a company that receives an advance payment for a service not yet performed?

A) Debit Cash, Credit Revenue

B) Debit Cash, Credit Unearned Revenue

C) Debit Unearned Revenue, Credit Service Revenue

D) Debit Revenue, Credit Unearned Revenue

When a company sells an asset for cash at a gain, which entry is correct?

A) Debit Cash, Credit Gain on Sale of Asset

B) Debit Asset, Credit Cash

C) Debit Cash, Credit Asset

D) Debit Cash, Credit Accumulated Depreciation

How would you record the adjustment for accrued rent at the end of the month?

A) Debit Rent Expense, Credit Cash

B) Debit Rent Expense, Credit Rent Payable

C) Debit Rent Payable, Credit Rent Expense

D) Debit Rent Payable, Credit Cash

What is the correct journal entry for issuing common stock for cash?

A) Debit Cash, Credit Common Stock

B) Debit Common Stock, Credit Cash

C) Debit Cash, Credit Retained Earnings

D) Debit Common Stock, Credit Retained Earnings

When a company collects cash from a customer on an outstanding account receivable, the correct journal entry is:

A) Debit Cash, Credit Service Revenue

B) Debit Cash, Credit Accounts Receivable

C) Debit Accounts Payable, Credit Cash

D) Debit Accounts Receivable, Credit Cash

Which type of account is “Sales Discounts Forfeited”?

A) Liability

B) Revenue

C) Contra Revenue

D) Expense

What is the correct entry when a company issues a refund to a customer for a returned product?

A) Debit Sales Revenue, Credit Cash

B) Debit Cash, Credit Sales Returns and Allowances

C) Debit Sales Returns and Allowances, Credit Accounts Receivable

D) Debit Sales Returns and Allowances, Credit Cash

Which of the following accounts would have a normal credit balance?

A) Cash

B) Prepaid Expenses

C) Accounts Payable

D) Salaries Payable

How should an increase in prepaid rent be recorded?

A) Debit Prepaid Rent, Credit Rent Expense

B) Debit Rent Expense, Credit Prepaid Rent

C) Debit Prepaid Rent, Credit Cash

D) Debit Cash, Credit Prepaid Rent

What is the correct journal entry for recording a loan payment that includes both principal and interest?

A) Debit Interest Expense, Credit Cash

B) Debit Loan Payable, Credit Cash

C) Debit Interest Expense, Debit Loan Payable, Credit Cash

D) Debit Cash, Credit Interest Payable

When a company borrows money from a bank and receives cash, which accounts are affected?

A) Debit Loan Payable, Credit Cash

B) Debit Cash, Credit Loan Payable

C) Debit Accounts Payable, Credit Cash

D) Debit Cash, Credit Revenue

What is the journal entry for recording accrued utilities at the end of the accounting period?

A) Debit Utilities Payable, Credit Utilities Expense

B) Debit Utilities Expense, Credit Utilities Payable

C) Debit Cash, Credit Utilities Expense

D) Debit Utilities Payable, Credit Cash

What is the correct entry for a company receiving a cash deposit from a customer for future services?

A) Debit Service Revenue, Credit Cash

B) Debit Cash, Credit Unearned Revenue

C) Debit Unearned Revenue, Credit Cash

D) Debit Cash, Credit Service Revenue

When a company purchases office supplies for cash, which entry is correct?

A) Debit Supplies Expense, Credit Cash

B) Debit Supplies, Credit Cash

C) Debit Office Equipment, Credit Cash

D) Debit Supplies, Credit Accounts Payable

If a company issues a promissory note to a supplier for the purchase of inventory, what is the correct journal entry?

A) Debit Inventory, Credit Notes Payable

B) Debit Notes Payable, Credit Inventory

C) Debit Cash, Credit Notes Payable

D) Debit Inventory, Credit Cash

When a company records interest accrued on a loan, which entry is correct?

A) Debit Interest Expense, Credit Interest Payable

B) Debit Interest Payable, Credit Interest Expense

C) Debit Cash, Credit Interest Expense

D) Debit Interest Payable, Credit Cash

Which entry records the receipt of a customer deposit for an order to be fulfilled later?

A) Debit Accounts Receivable, Credit Sales Revenue

B) Debit Cash, Credit Sales Revenue

C) Debit Cash, Credit Unearned Revenue

D) Debit Unearned Revenue, Credit Cash

How is the purchase of a new vehicle for the business recorded?

A) Debit Equipment, Credit Cash

B) Debit Vehicle Expense, Credit Cash

C) Debit Cash, Credit Vehicle Expense

D) Debit Vehicle, Credit Accounts Payable

When a company repays an amount owed to a creditor, which entry is correct?

A) Debit Accounts Payable, Credit Cash

B) Debit Cash, Credit Accounts Payable

C) Debit Cash, Credit Creditors

D) Debit Creditors, Credit Cash

When a company receives a partial payment for a previous sale, how is it recorded?

A) Debit Cash, Credit Sales Revenue

B) Debit Accounts Receivable, Credit Cash

C) Debit Cash, Credit Accounts Receivable

D) Debit Sales Revenue, Credit Cash

Which of the following accounts would have a normal debit balance?

A) Revenue

B) Expenses

C) Liabilities

D) Retained Earnings

What entry should be made when a company pays for utilities incurred in the current month?

A) Debit Utilities Expense, Credit Cash

B) Debit Utilities Payable, Credit Cash

C) Debit Utilities Expense, Credit Accounts Payable

D) Debit Cash, Credit Utilities Expense

When a company receives a payment for services performed, which accounts are affected?

A) Debit Revenue, Credit Cash

B) Debit Accounts Receivable, Credit Revenue

C) Debit Cash, Credit Service Revenue

D) Debit Cash, Credit Accounts Receivable

How is an increase in a liability recorded?

A) Debit Liability, Credit Revenue

B) Debit Expense, Credit Liability

C) Debit Cash, Credit Liability

D) Credit Liability, Debit Cash

If a company writes off an account as uncollectible, which entry is made?

A) Debit Cash, Credit Accounts Receivable

B) Debit Bad Debt Expense, Credit Allowance for Doubtful Accounts

C) Debit Allowance for Doubtful Accounts, Credit Accounts Receivable

D) Debit Accounts Receivable, Credit Bad Debt Expense

What is the effect of receiving cash from a loan on the company’s books?

A) Debit Cash, Credit Loan Payable

B) Debit Loan Payable, Credit Cash

C) Debit Cash, Credit Revenue

D) Debit Cash, Credit Accounts Payable

How should interest income earned but not yet received be recorded?

A) Debit Interest Receivable, Credit Interest Income

B) Debit Interest Income, Credit Interest Receivable

C) Debit Cash, Credit Interest Income

D) Debit Interest Receivable, Credit Cash

What is the correct journal entry when a company pays interest on a loan? –

A) Debit Interest Payable, Credit Cash –

B) Debit Interest Expense, Credit Interest Payable –

C) Debit Interest Expense, Credit Cash –

D) Debit Cash, Credit Interest Expense