An entry involving multiple debits or credits is designated as____________?
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Answer: D. Compound entry
Explanation
The correct answer is right because it features more than one debit or credit component. Accountants designate entries balancing multiple accounts simultaneously using this specific compound terminology. When a single financial transaction affects three or more accounts, it forms a compound entry. Standard simple entries involve only one debit and one corresponding credit account for any transaction. Compound entries maintain the fundamental accounting equation where total debits must equal total credits. They help streamline bookkeeping by consolidating related transactions occurring on the exact same date.
Purchasing equipment with a partial cash down payment and a note payable requires a compound entry. Payroll recording frequently involves multiple debit and credit lines for taxes, deductions, and net pay. Mastering compound entries is vital for accurate financial statement preparation in complex corporate environments. Journal entry is too broad since simple entries also fall under this general classification category. Multi entry is an informal colloquialism and not the accepted technical accounting term used worldwide. Additional entry is a generic descriptor that does not specifically denote multiple debits or credits.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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