Which of the following statements is false concerning the use of currency signs?
a. Currency signs do not appear in journals or ledgers.
b. Currency signs are generally only shown for the first item in a column and for the column total.
c. Currency signs are not typically used in the trial balance.
d. All of the choices are correct regarding currency signs.
The correct answer and explanation is :
The correct answer is a. Currency signs do not appear in journals or ledgers.
Explanation:
Currency signs, such as $, €, or £, are important in accounting to clarify the monetary values being recorded. Let’s break down why the statement in option a is false, and why the others are true.
Option a: Currency signs do not appear in journals or ledgers.
This statement is false because currency signs do indeed appear in journals and ledgers. In fact, currency signs are typically used in accounting documents such as journals and ledgers to specify the type of currency in which the transactions are being recorded. Although there may be some flexibility based on company policies, it is common practice to include currency signs when recording amounts in these documents. This ensures clarity for anyone reviewing the records, so they understand the monetary denomination being used (e.g., USD, EUR, etc.).
Option b: Currency signs are generally only shown for the first item in a column and for the column total.
This statement is true. In most accounting systems, currency signs are only placed at the top of a column (for the first entry) and at the bottom of the column (for the total). This convention is followed to save space and avoid redundancy, as it’s understood that all numbers within the column are expressed in the same currency. For example, if the first item in a column is labeled with a dollar sign, it is understood that the rest of the figures in that column also represent amounts in dollars, unless otherwise specified.
Option c: Currency signs are not typically used in the trial balance.
This statement is true. In a trial balance, the currency sign is usually omitted. The amounts are listed with no currency symbols because it is assumed that all accounts are in the same currency. The trial balance is essentially a summary document, and the focus is on the consistency and accuracy of account balances, not the specific currency used.
Option d: All of the choices are correct regarding currency signs.
This statement is false because option a is incorrect.
In conclusion, currency signs are indeed used in journals and ledgers, but typically only at the beginning and end of columns in those documents and often omitted in the trial balance.