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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.1)The first step in the accounting cycle is transaction analysis.
Answer:True False
2)An account is a detailed record of increases and decreases in a specific asset, liability or equity item.
Answer:True False
3)A ledger is a type of account.
Answer:True False
4)Goods sold on credit to customers are called accounts payable.
Answer:True False
5)As prepaid assets are used up, the costs of the assets become expenses.
Answer:True False
6)Withdrawals are a type of transaction that affects equity.
Answer:True False
7)A building is an example of an asset that does not provide any benefit to its owner.
Answer:True False
8)To make it easier for the bookkeeper, the cost of land is separated from the cost of buildings located on the land.
Answer:True False
9)Unearned revenues are assets, because a service or product is owed to the customer.
Answer:True False
10)Cash withdrawn by the owner of an unincorporated business in the form of a monthly salary should be treated as an expense of the business.
Answer:True False
11)When a company sells services for which cash will not be received until some future date, the company should credit an unearned revenues account for the amount charged to the customer.
Answer:True False
12)A T-Account is a formal account frequently used in business.
Answer:True False
13)An account balance is the difference between the increases and decreases recorded in an account.
Answer:True False
14)The left side of a T-account is always the credit side, while the right side is always the debit side.
Answer:True False
1 Fundamental Accounting Principles Volume 1 Canadian 15th Edition Larson Test Bank Visit TestBankDeal.com to get complete for all chapters
15)The accounting equation is expressed as assets = liabilities - equity.
Answer:True False
16)The accounting equation can be expressed as liabilities = assets - equity.
Answer:True False
17)In a double-entry accounting system, total debits must always equal total credits.
Answer:True False
18)Double-entry accounting means that every transaction affects and is recorded in at least two accounts.
Answer:True False
19)Debits increase asset and expense accounts.
Answer:True False
20)Credits to accounts are always increases.
Answer:True False
21)To credit an expense account means to decrease it.
Answer:True False
22)Increases in liabilities are recorded as debits.
Answer:True False
23)All increases and decreases in cash are not necessarily recorded in the Cash account.
Answer:True False
24)A revenue account normally has a debit balance.
Answer:True False
25)Debits to accounts are normally decreases.
Answer:True False
26)Because they decrease equity, withdrawals made by a business owner are credited to his/her withdrawals account.
Answer:True False
27)Asset accounts normally have credit balances and expense accounts normally have debit balances.
Answer:True False
28)The normal balance of an account refers to the debit or credit side where increases are recorded.
Answer:True False
29)The chart of accounts is a list of all the accounts used by a company.
Answer:True False
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30)A chart of accounts lists the accounts and balances at a specific time.
Answer:True False
31)Purchasing supplies on credit increases assets while decreasing liabilities.
Answer:True False
32)Prepaid Insurance is an expense account which is used for recording expenses that have been paid in advance.
Answer:True False
33)A credit purchase of a business expense item should be recorded with a debit to an expense account and a credit to Accounts Payable.
Answer:True False
34)If a company purchases land, paying part with cash and issuing a note payable for the balance, the journal entry to record this transaction will include a debit to Cash.
Answer:True False
35)If a company sells products and receives from the customer a formal written promise to pay a definite sum of money on demand or on a defined future date (or dates), the seller should debit the promised amount to Accounts Receivable.
Answer:True False
36)A transaction that decreases an asset account and increases a liability account must also affect another account.
Answer:True False
37)When a business sends a bill for $200 to a customer for services rendered, the journal entry to record this transaction will include a $200 credit to Accounts Receivable.
Answer:True False
38)A transaction that increases an asset account and decreases a liability account must also affect another account.
Answer:True False
39)Step Two of the accounting cycle requires that we record transactions in a record called a journal.
Answer:True False
40)A compound journal entry usually affects three or more accounts.
Answer:True False
41)A general journal entry usually includes information about the date of a transaction, titles of affected accounts, dollar amount of each debit and credit and an explanation of the transaction.
Answer:True False
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42)Posting is the process of copying the debit and credit amounts from a journal to the ledger accounts.
Answer:True False
43)Since all figures are eventually posted to the ledger, the posting reference column in a journal is not necessary.
Answer:True False
44)An abnormal balance in an account refers to a balance on the side where decreases are recorded.
Answer:True False
45)The trial balance is a list of the accounts that have balances in the ledger.
Answer:True False
46)A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.
Answer:True False
47)If an account was incorrectly debited for $300 instead of correctly credited for $300, the account is out of balance by $300.
Answer:True False
48)If an error is discovered in either the journal or the ledger, it must be corrected by erasing the incorrect amount and entering the corrected amount.
Answer:True False
49)The total dollar value of all debits and credits recorded in a journal entry must be equal.
Answer:True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
50)The accounting cycle begins with:
A)Presentation of financial information to decision makers.B)Analysis of economic events and recording their effects.C)Posting to the ledger.D)Preparing financial statements and other reports.E)None of these answers is correct.
Answer:B
51)A place or location within an accounting system in which the increases and decreases in a specific
asset, liability, or equity item is recorded and stored is called a(n):
A)Ledger.B)Trial balance.C)Journal.D)Account.E)Chart of accounts.
Answer:D
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