question

Accounting is the language of business

answer

True

question

Keeping personal and business records separate is an application of the business entity concept

answer

True

question

Assets such as cash and supplies have value because the can be used to acquire other assets or be used to operate a business

answer

True

question

The relationship among asserts, liabilities, and owner's equity can be written as an equation

answer

True

question

The equation is called the accounting equation and does not have to be in balance to be correct

answer

False

question

The sum of the assets and liabilities of a business always equal the investment of the business owner

answer

False

question

Recording business costs in terms of hours required to complete projects and sales in terms of dollars is an application of the unit of measurement concept

answer

True

question

The capital account is an owner's equity

answer

True

question

If two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance

answer

False

question

When cash is paid on account, a liability is increased

answer

False

question

The Going Concern accounting concept affects the way financial statements are prepared

answer

True

question

On a balance sheet, a single line means that amounts are to be added or subtracted

answer

True

question

A transaction for the sale of goods or services is an increase in owner's equity

answer

True

question

When cash is received for services performed, the asset account Cash is increased and the owner's equity account is decreased

answer

False

question

Accounts Receivable is a liability account

answer

False

question

Regardless of when payment is made when services are sold, the revenue should be recorded at the time of the same

answer

True

question

A transaction that increases accounts receivable and increases owner's equity is a sale on account

answer

True

question

Owner's equity is decreased by a sale on account

answer

False

question

When cash is paid for expenses, the business has less cash ; therefore, the assets account Cash is decreased and the owner's equity account is increased

answer

False

question

Cash is increased by expenses

answer

False

question

Recording an expense transaction in an accounting equation increases liabilities

answer

False

question

When a company makes payments for advertising and charitable contributions, the company is paying expenses

answer

True

question

When a company receives cash from a customer for a prior sale, the transaction decreases the cash account balance and increases the accounts receivable balance

answer

False

question

A withdrawal is a transaction that decreases cash and decreases owner's equity

answer

True

question

When cash is paid to the owner for personal use, assets decrease and owner's equity decreases

answer

True

question

An owner may withdraw only cash from a business; other assets must remain in the business at all times for the accounting equation to be in balance

answer

False

question

Three transactions that affect owner's equity are receiving cash on account, paying expenses, and paying for supplies bough ton account

answer

False

question

A balance sheet may be prepared on any date

answer

True

question

The accounts on the left side of the accounting equation are reported on the left side of the balance sheet

answer

True

question

Few businesses need to prepare a balance sheet every day

answer

True

question

The balance sheet reports the balanced of the asset, liability, and owner's equity accounts

answer

True

question

The heading of a balance sheet contains the name of the business, name of the report, and date of the report

answer

True

question

The accounts on the left side of the accounting equation include liabilities and owner's equity

answer

False

question

The total of the left side of the balance sheet is equal to the right side, and these totals need not be on the same line

answer

False

question

Asset accounts are shows on the right side of the balance sheet

answer

False

question

Owner's equity accounts are presented above liability accounts on the balance sheet

answer

False

question

When a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage

answer

True

question

When items are bought and paid for later this is referred to as buying on account

answer

True

question

Transactions are recorded in a journal in order by date and in one place

answer

True

question

The Objective Evidence Accounting concept requires that there be proof that a transaction did occur

answer

True

question

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

answer

False

question

The source document for all cash payments is a sales invoice

answer

False

question

A check is the source document used when items are paid in cash

answer

True

question

A receipt is the source document for cash received from transactions other than sales

answer

True

question

A calculator tape is the source document for daily sales

answer

True

question

The source document used when supplies are bought on account is a memorandum

answer

True

question

The source document used when supplies bought on account are paid for is a check

answer

True

question

The journal columns used to record receiving cash from sales and cash debit and sales credit

answer

True

question

The source document sales invoice is abbreviated as SI in a journal entry

answer

False

question

The journal columns used to record paying cash to the owner for personal use are general debit and cash credit

answer

True

question

To prove a journal page, the total debit amounts are compared with the total credit amounts to be sure they are equal

answer

True

question

Double lines across column totals mean that the totals have been verified as correct

answer

True

question

To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place

answer

False

question

Dollars and cents signs and decimal points should be used when writing amounts on ruled accounting pages

answer

False

question

Because an account form has columns for the debit and credit balance of an account, it is often referred to as the balance-ruled account form

answer

True

question

The asset division accounts for Encore Music are numbered in the 100s

answer

True

question

The cash account is the first asset account and is numbered 100

answer

False

question

The second division of Encore Music's chart of accounts is the owner's equity division

answer

False

question

The first digit of account numbers for accounts in the owner's equity ledger division is 3

answer

True

question

The last two digits in a 3-digit account number indicate the general ledger division of the new account

answer

False

question

When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515

answer

True

question

Encore Music arranges accounts in chronological order in its general ledgers

answer

False

question

The two steps for opening an account are writing the account title and recording the balance

answer

False

question

Separate amounts in the special amount columns are posted individually

answer

False

question

Separate amounts in the sales credit column are not posted individually

answer

True

question

Separate amounts in general amount columns are not posted individually

answer

False

question

The posting reference should always be recorded in the journal's post reference column before amounts are recorded in the ledger

answer

False

question

The only reason for the post reference columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted

answer

False

question

The steps for posting are to write the date, journal page number, amount, and balance

answer

False

question

The totals of general amount columns in a journal are not posted

answer

True

question

The totals of special amount columns in a journal are not posted

answer

False

question

A check mark in parenthesis below a general debit total indicates that the total is not posted

answer

True

question

With the exception of the totals lines, the post reference column is completely filled in with either an account number or a check mark

answer

True

question

Because cash transactions occur more frequently than other transactions, the chances for making recording errors affecting are less

answer

False

question

When deposit is made in a bank account, the bank issues a receipt

answer

True

question

There are four types of endorsements commonly used: blank, special, original, and restrictive

answer

False

question

A check with a blank endorsement can be crashed by anyone who has the check

answer

True

question

A check with a blank endorsement can be cashed by anyone who has the check

answer

True

question

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

answer

True

question

Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime

answer

False

question

The amount of a check is written twice on each check

answer

True

question

A check that contains errors must be marked with the word VOID and another check must be written

answer

True

question

An outstanding check is one that has been issued but not yet reported on a bank statement

answer

True

question

An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement

answer

True

question

Banks deduct service charges from customer's checking accounts without requiring customers to write a check from the account as well

answer

True

question

Not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the check from the account as well

answer

True

question

The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by check

answer

False

question

The source document for a debit card purchase is memorandum

answer

True

question

Encore Music maintains a petty cash fund for making large cash payments without writing checks

answer

False

question

Using a petty cash fund usually decreases the number of checks that have to be written

answer

False

question

A memorandum is the source document for the entry to record establishing a petty cash fund

answer

False

question

Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment

answer

True

question

When the petty cash fund is replenished, the balance of the petty cash account increases

answer

False

question

The accounting concept Consistent Reporting is being applied when a word processing service business reports revenue per page one year and revenue per hour the next year

answer

False

question

An accounting period is also known as a fiscal period

answer

True

question

Journals, ledgers, and work sheets are considered permanent records

answer

False

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

The two accounts affected by the adjustment for supplies are supplies and supplies expense

answer

True

question

The two accounts affected by the adjustment for insurance are prepaid insurance expense ans insurance

answer

False

question

Totaling and ruling the adjustments columns of a work sheet is necessary to prove the equality of debits and credits

answer

True

question

Two financial statements are prepared from the information on the worksheet

answer

True

question

Net income on a worksheet is calculated by subtracting the income statement credit column total from the income statement debit column total

answer

false

question

if errors are found on a worksheet, they must be erased and corrected before any further work is completed

answer

True

question

When two column totals are not in balance on the worksheet, the difference between the two totals is calculated and checked

answer

False

question

If the difference between the totals of debit and credit columns on a worksheet can be evenly divided by 9, then the error is most likely in addition

answer

False

question

If there are errors in the worksheets trial balance columns, it might be because not all general ledger account balanced were copied in the trial balance column correctly

answer

True

question

Errors in general ledger accounts should never be erased

answer

True

question

Most errors occur in doing arithmetic

answer

True

question

Using a calculator will help prevent errors in accounting records, but not all errors are due to incorrect calculations

answer

True

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