Unit 2 Test Chapters 3-7 True/False Practice – Flashcards
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True
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The analysis of business transactions into their debit and credit parts is required for both manual and computerized accounting systems.
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False
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Assets are always posted before expenses.
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True
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Utilities Expense is an example of a temporary capital account.
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True
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The normal balance side of any account is the same side used to increase that account.
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True
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Revenue accounts temporarily substitute for the credit side of the owner's capital account.
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False
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Financial claims to property are the same as legal rights to property.
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True
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Accountants use T accounts to analyze the parts of a business transaction.
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False
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There are six steps in the accounting cycle.
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True
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Increases in expenses are recorded as debits.
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False
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The chart of accounts is an alphabetical listing of a business's accounts.
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False
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The rules of debit and credit for liability accounts are the same as the rules for asset accounts.
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True
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Liability accounts normally have account numbers beginning with the number "2."
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False
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Withdrawals is a permanent account.
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True
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The account balance is the difference between the debit and credit amounts in the account.
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False
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The decrease side of an account is always the same as the balance side.
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True
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Liabilities and the owner's capital account appear on the right side of the accounting equation.
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True
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The debit and credit parts of an entry must be equal for the accounting equation to remain in balance.
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True
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The purpose of posting is to show the effect business transactions have on the accounts in the general ledger.
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True
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Office Equipment is an asset account.
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True
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An increase in revenue is recorded as a credit.
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False
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The payment of a liability is recorded by a debit to the liability account and a credit to the capital account.
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False
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Permanent accounts start each accounting period with a zero balance.
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False
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A credit to an account always increases it; a debit to an account always decreases it.
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True
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Temporary accounts are extensions of the owner's capital account.
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False
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If a business transaction is journalized on the 8th of the month but posted on the 10th, the date entered in the Date column of the ledger account is the 10th.
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False
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An owner's capital account is increased on the debit side and normally has a debit balance.
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True
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Expenses have the opposite effect from revenue on the capital account.
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True
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Accounts Payable is a liability account.
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False
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A trial balance is normally prepared before posting.
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True
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Every business transaction affects two or more accounts and is recorded by equal amounts of debits and credits.
