True False Questions

Chapter 02 - Accounting System and Financial Statements

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 Accounting System and Financial Statements

True / False Questions

[Question]

• Accounting records are also referred to as the books.

Answer: TRUE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C1

Topic: Accounting Records

[Question]

• The first step in the analyzing and recording process is to analyze each transaction and

event from source documents.

Answer: TRUE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C1

Topic: Source Documents

Topic: Accounting Records

Financial Accounting Information for Decisions 7th Edition Wild Test Bank Visit TestBankDeal.com to get complete for all chapters

Chapter 02 - Accounting System and Financial Statements

2-2 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.[Question]

• Preparation of a trial balance is the first step in the analyzing and recording process.

Answer: FALSE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C1

Topic: Accounting Records

[Question]

• Items such as sales slips, invoices, checks, and purchase orders are source documents.

Answer: TRUE

Blooms Taxonomy: Understand

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 02-C1

Topic: Source Documents

[Question}

• An account is a record of increases and decreases in a specific asset, liability, equity,

revenue, or expense item.

Answer: TRUE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C2

Topic: Account

Chapter 02 - Accounting System and Financial Statements

2-3 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.[Question]

• According to the seller, a customer's promise to pay is called an account payable.

Answer: FALSE

Blooms Taxonomy: Understand

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 02-C2

Topic: Account Receivable

Topic: Account Payable

Topic: Account

[Question]

• Dividends are a type of business expense.

Answer: FALSE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C2

Topic: Dividends

Topic: Account

[Question]

• As prepaid expenses are used up, the costs of these assets become expenses.

Answer: TRUE

Blooms Taxonomy: Understand

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 02-C2

Topic: Prepaid Expenses

Topic: Account

Chapter 02 - Accounting System and Financial Statements

2-4 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.[Question]

• Land and buildings are generally recorded in the same ledger account.

Answer: FALSE

Blooms Taxonomy: Understand

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 02-C2

Topic: Land

Topic: Building

Topic: Account

[Question]

• It is not necessary to keep separate accounts for all items of importance for business

decisions.

Answer: FALSE

Blooms Taxonomy: Understand

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 2 Medium

Learning Objective: 02-C2

Topic: Account

[Question]

• Unearned revenues are classified as liabilities.

Answer: TRUE

Blooms Taxonomy: Remember

AACSB: Analytic

AACSB: Communication

AICPA BB: Critical Thinking

AICPA BB: Industry

AICPA FN: Measurement

AICPA FN: Reporting

Difficulty: 1 Easy

Learning Objective: 02-C2

Topic: Unearned Revenue