question

When financial records for a business and for its owner's personal belongings are not mixed, this is an application of the Business Entity accounting concept.

answer

True

question

The capital account is an owner's equity account.

answer

True

question

An accounting device used to analyze transactions is a T account.

answer

True

question

When cash is paid for supplies, the supplies account is increased by a debit.

answer

True

question

Increases in expense accounts are recorded as debits because they decrease the owner's capital accounts.

answer

True

question

Increases in revenue accounts are recorded as debits because they increase the owner's capital accounts.

answer

False. Increases in revenue accounts are recorded as credits.

question

Accounts payable accounts are increased with a debit.

answer

False. Accounts payable accounts are increased with a credit because they are liabilities.

question

Increases in drawing accounts are recorded as credits.

answer

False. Increases in drawing accounts are recorded as debits.

question

Examples of source documents include: checks, sales invoices, memorandums, and letters.

answer

False. Source documents include: check, invoice, sales invoice, receipt, memorandum

question

Source document ordering bank to pay cash from a bank account.

answer

Check

question

Source document that describes goods or services sold, quantity, and price.

answer

Invoice

question

Source document used to record a sale on account.

answer

Sales Invoice

question

Source document giving written acknowledgement for cash received.

answer

Receipt

question

Source document on which a brief message is written describing a transaction.

answer

Memorandum

question

A transaction recorded in a journal is not considered a permanent record.

answer

False. A transaction recorded in a journal is considered a permanent record.

question

A journal amount column headed with an account title is a special amount column.

answer

True

question

The procedure of arranging accounts in a general ledger, assigning account numbers, and keeping current records is posting.

answer

False. It is file maintenance.

question

The day of the month is written on each journal page only for the first entry.

answer

False. It is written for every entry.

question

A journal page is proved by verifying that the total debits equals the total credits.

answer

True

question

Posting is transferring information from a journal entry to a ledger account.

answer

True

question

If the previous account balance and the current entry posted to an account are both debits, the new account balance is a debit.

answer

True.

question

The total of the General Credit column is not posted.

answer

True

question

A ledger that contains all accounts needed to prepare financial statements is a general ledger.

answer

True

question

Separate amounts in general amount columns are not posted individually.

answer

False. Separate amounts in general amount columns are posted individually.

question

The posting reference should always be recorded in the journal's "Post Ref." column before accounts are recorded in the ledger.

answer

False. The posting reference should always be recorded in the journal's "Post Ref." column after accounts are recorded in the ledger.

question

A check mark in parentheses below a General Debit column total indicates that the total is not posted.

answer

True

question

With the exception of the totals lines, the "Post. Ref." column is completely filled in with either an account number or a check mark.

answer

True

question

Ownership of a check cannot be transferred.

answer

False. It can be transferred.

question

When a bank statement is received, the depositor should verify its accuracy immediately.

answer

True

question

The petty cash fund is a liability with a normal debit balance.

answer

False. The petty cash fund is an asset.

question

When writing a check, the first step is to prepare the check stub.

answer

True

question

A bank requires that the signature of the person authorized to sign checks be on the signature card.

answer

True

question

Many businesses choose a one-year fiscal period that ends during a period of high business activity.

answer

False. Many businesses choose a one-year fiscal period that ends during a period of low business activity.

question

The column in which an account balance is recorded on a trial balance shows whether the account has a debit or credit balance.

answer

True

question

Every adjustment has debit and credit parts.

answer

True

question

All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts.

answer

True

question

Net income on a work sheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total.

answer

False. Net income on a work sheet is calculated by subtracting the Income Statement Debit column total from the Income Statement Credit column total.

question

Errors in general ledger accounts should never be erased.

answer

True

question

Amounts from a work sheet's Trial Balance columns are used in preparing the revenue section of an income statement.

answer

False

question

For a service business, the revenue reported on an income statement includes components for total expenses and net income.

answer

True

question

Information needed to prepare the assets section of the balance sheet is obtained from the work sheet's Account Title column and the Balance Sheet Credit column.

answer

False

question

The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period.

answer

True

question

A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity.

answer

True

question

A balance sheet reports information about the elements of the accounting equation.

answer

True

question

The position of the total asset line is determined after the equities section is prepared.

answer

True

question

All companies should have a total expenses component percentage that is not more than 80.0 percent.

answer

False

question

The owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net income.

answer

False. The owner's capital amount reported on a balance sheet is calculated as: capital account balance plus net income (or minus net loss) minus drawing account balance.

question

Adjustments are first analyzed and planned on a work sheet before the adjusting entries are journalized.

answer

True

question

A source document is prepared for adjusting entries.

answer

False

question

The amount remaining after the value of all liabilities is subtracted from the value of all assets is ________.

answer

Owner's Equity

question

The account used to summarize the owner's equity in a business is _______.

answer

Capital

question

When a business pays cash for supplies, _______.

answer

Assets increase and assets decrease

question

When cash is paid on account, _______.

answer

One asset and one liability are changed.

question

A business has total cash of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200, and pays $300.00 more on account. The balance of the cash account is now _______.

answer

$26,750

question

The asset most commonly withdrawn by business owners is _______.

answer

Cash

question

The right side of the T account is the _______.

answer

Credit side

question

When a business buys an asset on one date and agrees to pay on a later date, the transaction is _______.

answer

On account

question

When a business receives revenue, Sales is _______.

answer

Increased by a credit

question

When cash is paid for rent, Rent Expense is _______.

answer

Increased by a debit

question

The values of all things owned (assets) are on the accounting equation's _____.

answer

Left side (debit side)

question

The recording of debit and credit parts of a transaction is _______.

answer

Double-Entry Accounting

question

Preparing source documents for each transaction is an application of the accounting concept _______.

answer

Objective Evidence

question

A business form ordering a bank to pay cash from a bank account is a _______.

answer

Check

question

When supplies are bought on account, the account debited is ________.

answer

Supplies

question

At the end of a month, if the amount of cash is the same as the balance shown on the next check stub, ________.

answer

Cash is proved

question

If an error is recorded in a journal entry, _______.

answer

-Cancel the error by drawing a neat line through the error -Correct the entry by writing the correct item above the canceled error -Do not erase the incorrect item

question

When cash is paid for utilities, the amount is recorded in the _______.

answer

Cash Credit column and General Debit column

question

When cash is received on account, the amount is recorded in the _______.

answer

Cash Debit column and General Credit column

question

A new account added between accounts 530 and 540 will be assigned the number ____.

answer

535

question

The first step in the posting procedure is writing _______.

answer

The entry date in the "Date" column of the account

question

The last step in the posting procedure is writing _______.

answer

The post reference number in the "Post. Ref." column of the journal

question

An account number in the journal's "Post. Ref." column shows ______.

answer

The account to which an amount is posted

question

Separate amounts in the General Debit and General Credit amount columns of a journal are _______.

answer

Posted individually

question

Check marks are placed in parentheses below the General Debit and Credit column totals to show that ______.

answer

The totals are not posted

question

Separate amounts in the Sales Credit column of a journal are ____.

answer

Not posted individually

question

Separate amounts in the Cash Debit column of a journal are _____.

answer

Not posted

question

A signature or stamp on the back of a check transferring ownership is _____.

answer

An endorsement

question

The source document for journalizing a bank service charge is a ______.

answer

Memorandum

question

Following the same accounting procedures in the same way in each accounting period is an application of the accounting concept _______.

answer

Consistent Reporting

question

Reporting changes in financial information for a specific period of time in the form of financial statements is an application of the accounting concept ______.

answer

Accounting Period Cycle

question

Recording revenue from business activities and expenses associated with earning that revenue in the same accounting period is an application of the accounting concept _____.

answer

Matching Expenses with Revenue

question

If the Trial Balance columns are not equal and the difference can be divided evenly by 9, the error most likely is ___.

answer

In transposed numbers or a "slide"

question

An income statement reports a business's financial _____.

answer

Progress over a specific period of time

question

The sections of an income statement are _____.

answer

heading, revenue, expenses, and net income or net loss

question

The date on a monthly income statement prepared on July 31 is written as _______.

answer

For Month Ended July 31, 2015

question

The percentage relationship between one financial statement item and the total that includes that item is _____.

answer

A component percentage

question

The formula for calculating the total expenses component percentage is ___.

answer

Total expenses divided by total sales equals total expenses component percentage

question

Information needed to prepare a balance sheet assets section is obtained from a work sheet's Account Title column and _____.

answer

Balance Sheet Debit column

question

When preparing a balance sheet, the amount of owner's capital is obtained from _____.

answer

The work sheet's Balance Sheet Credit column

question

The journal entry to adjust Supplies is _____.

answer

Debit Supplies Expense; credit Supplies

question

After the adjusting entry for Supplies has been posted, Supplies Expense has an up-to-date balance, which is the _____.

answer

Value of supplies used during the fiscal period

question

When the revenue is greater than the total expenses, ______.

answer

The income summary account has a credit balance

question

Information needed for closing entries is found in the _____.

answer

Income Statement and Balance Sheet columns of the work sheet.

question

The journal entry to close the expense accounts is _____.

answer

Debit Income Summary for the total expenses; credit each expense account

question

Which account concept applies when financial statements are prepared from information on the work sheet?

answer

Adequate Disclosure

question

Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue?

answer

Matching Expenses with Revenue

question

Information needed for journalizing the adjustment entries is obtained from the ______.

answer

Work sheet's adjustment columns

question

The last step in the accounting cycle is _____.

answer

Post-Closing Trial Balance

question

Accounting Cycle

answer

1.) Analyze transactions 2.) Journalize 3.) Post 4.) Prepare work sheet 5.) Prepare financial statements 6.) Adjust and close entries 7.) Post adjusted and closed entries 8.) Post-Closing Trial Balance

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