The accounting system uses a device called an account.An account
A)is created each time a transaction takes place.
B)accumulates the increases and decreases that occur during the period for a single item.
C)is created only for income statement items.
D)is created only for balance sheet items.
E)is created only for statement of cash flows items.

Question

Quizplus · Accepted Answer

An account accumulates the increases and decreases that occur during the period for a single item. It helps keep track of the financial transactions related to that item, whether it is an asset, liability, equity, revenue or expense item. Accounts are used in both the income statement and the balance sheet as they help in measuring profitability and financial position of the organization. Accounts are not created for every transaction, but rather for the items that the organization wants to keep track of.

The Accounting System Uses a Device Called an Account