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2-1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 02 Analyzing and Recording Transactions
True / False Questions
- The first step in the processing of a transaction is to analyze the transaction and source
documents.
True False
- Preparation of a trial balance is the first step in processing a financial transaction.
True False
- Source documents provide evidence of business transactions and are the basis for accounting
entries.
True False
- Items such as sales tickets, bank statements, checks, and purchase orders are examples of a
business's source documents.
True False
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2-2 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or
expense item.
True False
- A customer's promise to pay on credit is classified as an account payable by the seller.
True False
- Withdrawals by the owner are a business expense.
True False
- The purchase of land and buildings will generally be recorded in the same ledger account.
True False
- Unearned revenues are classified as liabilities.
True False
- Cash withdrawn by the owner of a proprietorship for personal expenses, should be treated as an
expense of the business.
True False
- 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.
True False
2-3 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- A company's chart of accounts is a list of all the accounts used and includes an identification
number assigned to each account.
True False
- An account's balance is the difference between the total debits and total credits for the account,
including any beginning balance.
True False
- The right side of an account is called the debit side.
True False
- In a double-entry accounting system, the total dollar amount debited must always equal the total
dollar amount credited.
True False
- Increases in liability accounts are recorded as debits.
True False
- Debits increase asset and expense accounts.
True False
- Credits always increase account balances.
True False
2-4 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
- Crediting an expense account decreases it.
True False
- A revenue account normally has a debit balance.
True False
- Asset accounts are normally decreased by debits.
True False
- Debit means increase and credit means decrease for all accounts.
True False
- Asset accounts normally have debit balances and revenue accounts normally have credit balances.
True False
- An owner's withdrawal account normally has a debit balance.
True False
- A debit entry is always an increase in the account.
True False
- A transaction that credits an asset account and credits a liability account must also affect one or
more other accounts.
True False
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