Question

Every debit has equal corresponding credit.

• A. True
• B. False

Answer 1

The correct option is A True

The principle of double entry system of accounting is "Every debit has a corresponding credit" hence the total of all debits has to be equal to the total of all credits. In simple words, every business transaction affects two accounts. If one account is debited the the other account will be credited with the similar amount.

For example, if the business purchases machinery worth Rs. 5,00,000, then machinery account gets debited with amount Rs. 5,00,000 as the business is receiving an asset for its operation, on the other side cash account automatically gets credited with the same amount of Rs. 5,00,000 as cash is going out of business.