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Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education
2-1
Chapter 2
ANALYZING FOR BUSINE SS TRANSACTIONS
True /False Questions
- The first step in the processing of a transaction is to analyze the transaction and source
documents.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Analyzing and Recording Process
- Preparation of a trial balance is the first step in processing a financial transaction.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Analyzing and Recording Process
- Source documents provide evidence of business transactions and are the basis for
accounting entries.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Analyzing and Recording Process
Financial Accounting Fundamentals 5th Edition Wild Test Bank Visit TestBankDeal.com to get complete for all chapters
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education
2-2
- Items such as sales tickets, bank statements, checks, and purchase orders are examples of a
business’s source documents.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Analyzing and Recording Process
- An account is a record of increases and decreases in a specific asset, liability, equity,
revenue, or expense item.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
- A customer’s promise to pay on credit is classified as an account payable by the seller.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
- Dividends paid to the stockholders are a business expense.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education
2-3
- The purchase of land and buildings will generally be recorded in the same ledger account.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
- Unearned revenues are classified as liabilities.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
- Cash paid to stockholders by the business of a corporation and used for personal expenses,
should be treated as an expense of the business.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and Its Analysis
- When a company provides services for which cash will not be received until some future
date, the company should record the amount charged as accounts receivable.
Answer: True
Blooms: Understand
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty:2 Medium
Learning Objective: 02-C2
Topic: The Account and Its Analysis
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education
2-4
- A company’s chart of accounts is a list of all the accounts used and includes an
identification number assigned to each account.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C3
Topic: Ledger and Chart of Accounts
- An account’s balance is the difference between the total debits and total credits for the
account, including any beginning balance.
Answer: True
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: The Account and its Analysis
- The right side of an account is called the debit side.
Answer: False
Blooms: Remember
AACSB: Communication
AICPA BB: Industry
AICPA FN: Decision Making
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debits and Credits
- In a double-entry accounting system, the total dollar amount debited must always equal
the total dollar amount credited.
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