Under the double-entry system, a decrease in an asset is recorded by: MCQ with Answer and Explanation

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Under the double-entry system, a decrease in an asset is recorded by:

A. Crediting the capital account

B. Debiting the asset account

C. Crediting the asset account

D. Debiting a liability account

Answer: Option C

Solution (By JKSSB Mock Tests)

Assets have normal debit balances. A decrease is recorded by crediting the account.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

A 'Letter of Credit' is a:

A. Debit note

B. Bank guarantee for payment

C. Voucher

D. Credit note

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Correct Answer: Option B

Explanation:
Letter of credit is a bank's commitment to pay the seller on behalf of buyer, reducing risk.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

An error where the effect of one error is neutralized by the effect of another error is called:

A. Error of principle

B. Error of omission

C. Compensating error

D. Error of commission

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Correct Answer: Option C

Explanation:
Compensating errors mutually cancel each other out, ensuring the Trial Balance continues to tally despite the mistakes.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

A 'Pay-in-slip' is a source document used for:

A. Paying wages to employees

B. Withdrawing cash from the bank

C. Depositing cash or cheques into the bank

D. Recording petty cash expenses

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Correct Answer: Option C

Explanation:
A pay-in-slip is filled out by a customer when depositing money or cheques into their bank account.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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