Question

Which of the following statements below lists the rules of entering transactions into the accounting equation?

a. The accounting equation can be out of balance only when payment will be received at a future date.
b. An asset account and a liability account are always affected.
c. Transactions entered into the accounting equation must involve cash and an equity account.
d. The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

Answer 1

The correct answer is (D)

Step-by-step explanation:

There are various rules which help to enter transactions into an accounting equation. Transactions are entered in the accounting equation that consists of all the transactions related to the firm’s cash. The only rule or the golden rule is to enter the transactions into the accounting equation in such a way so that assets always equal the sum of liabilities and equity.