Florida General Contractor Practice Exam 2026 - Free Contractor License Practice Questions and Study Guide

Question: 1 / 400

In double-entry bookkeeping, cash accounts would be registered as what?

Assets with credit balances

Liabilities with debit balances

Assets with debit balances

In double-entry bookkeeping, cash accounts are registered as assets with debit balances because cash is a resource owned by the business, representing value that can be used to pay for expenses, invest in operations, or settle obligations. When cash is received, it increases the cash account, typically recorded as a debit entry, reflecting an increase in assets. Conversely, when cash is spent or withdrawn, it decreases the cash account, recorded as a credit entry.

This fundamental principle is essential in maintaining the accounting equation: Assets = Liabilities + Equity. Debits and credits maintain this balance. Since cash is classified as an asset, it inherently carries a debit balance, aligning with accounting standards that dictate how transactions are recorded. Thus, in the context of the answer provided, understanding that cash must reflect an increase in value through debit entries is crucial for accurate financial reporting and analysis.

Get further explanation with Examzify DeepDiveBeta

Expenses with credit balances

Next Question

Report this question

Download Florida General Contractor Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy