State BPA Fundamental Accounting Practice Exam

Every accounting transaction must have at least how many entries?

1. One debit

2. One credit

3. At least one debit and one credit

4. Two debits

The correct answer is: At least one debit and one credit

Every accounting transaction must be recorded in such a way that the accounting equation (Assets = Liabilities + Equity) remains balanced. This is achieved through the double-entry accounting system, which mandates that every transaction must include at least one debit and one credit entry. When a transaction occurs, it impacts at least two accounts. For instance, if a company purchases equipment, it will increase the Equipment account (a debit) while also decreasing either Cash or increasing Accounts Payable (a credit). This ensures that for every value entered as a debit, there is an equal and opposite value recorded as a credit, thereby maintaining balance in the accounting records. By requiring at least one debit and one credit for each transaction, the double-entry system helps prevent errors and provides a complete picture of a company's financial status. This fundamental principle is crucial for accurate financial reporting and analysis.