Chapter 2 T/F – Flashcards
Unlock all answers in this set
Unlock answersquestion
Liability accounts are increased by debits.
answer
F
question
The normal balance of the drawing account is a debit.
answer
T
question
When an account receivable is collected in cash, the total assets of the business increase.
answer
F
question
The journal includes both debit and credit accounts for each transaction.
answer
T
question
Prepaid expenses are an example of an expense.
answer
F
question
Debiting the cash account, will increase the account.
answer
T
question
Liabilities are debts owned by the business entity.
answer
T
question
To determine the balance in an account, always subtract credits from debits.
answer
F
question
The cash account will always be debited.
answer
F
question
Liabilities are increase with debits and decrease with credits.
answer
F
question
The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.
answer
F
question
A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.
answer
F
question
Once journal entries are posted to accounts, each account will show a new balance after each entry.
answer
T
question
The journal is the book of original entry.
answer
T
question
For a month's transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.
answer
F
question
The increase side of all accounts is the normal balance.
answer
T
question
The process of transferring the data from the journal to the ledger accounts is posting.
answer
T
question
The right hand side of a T account is known as a debit and the left hand side is known as a credit.
answer
F
question
Even when a trial balance is in balance, there may be errors in the individual accounts.
answer
T
question
Journal entries can have more than two accounts as long as the debits equal the credits.
answer
T
question
The normal balance of a capital account is a debit.
answer
F
question
When a business receives a bill from the utility company, no entry should be made until the invoice is paid.
answer
F
question
Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance.
answer
F
question
A drawing account represents the amount of investments less withdrawals made by the owner.
answer
T
question
Accounts in the ledger are usually maintained in alphabetical order.
answer
F
question
The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing, and therefore should be equal.
answer
F
question
A group of related accounts that make up a complete unit is called a trial balance.
answer
F
question
The T account got its name because it resembles the letter "T"
answer
T
question
Accounts are records of increases and decreases in individual financial statement items.
answer
T
question
A credit to the cash account will increase the account.
answer
F
question
Consuming goods and services in the process of generating revenues results in expenses.
answer
T
question
Recording a credit to all owner's equity accounts will increase the account.
answer
F
question
Expenses are assets that no longer have a value to the company.
answer
T
question
Normal balances are the side that increases the account balance.
answer
T
question
Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.
answer
F
question
The recording of cash receipts to the cash account will be done by debiting the account.
answer
T
question
Unearned Revenues are an example of a liability.
answer
T
question
Drawings are an example of an expense.
answer
F
question
The right side of the account is referred to as the credit side.
answer
T
question
Expense accounts are increased by credits.
answer
F
question
The materiality concept implies that if an error is large enough or could effect the decisions of its users, a correction is absolutely necessary.
answer
T
question
Journalizing is the process of entering amounts in the ledger.
answer
F
question
A trial balance determines the accuracy of the numbers.
answer
F
question
Posting a transaction twice will cause the trial balance totals to be equal.
answer
T
question
Transactions are listed in the journal chronologically.
answer
T
question
The chart of accounts should be the same for each business.
answer
F
question
A transaction that is recorded in the journal is called a journal entry.
answer
T
question
When an accounts payable account is paid in cash, the owner's equity in the business decreases.
answer
F
question
The post reference notation used in the journal is the page number.
answer
F
question
Revenues is the difference between cash receipts and cash payments.
answer
F
question
A correction entry is required for all errors that are discovered.
answer
F
question
Businesses may use several special journals in their accounting systems.
answer
T
question
When an owner invests assets in the business, the capital account increases due to revenue being earned.
answer
F
question
Accounts payable are accounts that you expect will be paid to you.
answer
F
question
If the trial balance is in balance, it can be assumed that all journal entries were posted corrected and no errors were made.
answer
F
question
Owner's capital will be reduced by the amount in the drawing account.
answer
T
question
Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.
answer
F
question
The erroneous moving of an entire number one or more spaces to the right or left, such as writing $75 as $750, is called a transposition.
answer
F
question
A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.
answer
T
question
A chart of accounts is a listing of accounts that make up the journal.
answer
F
question
Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue.
answer
F
question
The double-entry accounting system records each transaction twice.
answer
F
question
For a month's transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.
answer
F
question
An account has three parts to it; a title, an increase side, and a decrease side.
answer
T
question
The process of transferring the debits and credits from the journal entries to the accounts is known as "updating the accounts".
answer
F
question
Assets are increased with debits and decrease with credits.
answer
T
question
The normal balance of an expense account is a credit.
answer
F
question
Revenue accounts are increased by credits.
answer
T
question
Debits will increase Unearned Revenues and Revenues.
answer
F
question
The recording of cash payments to the cash account will be done by entering the amount as a credit.
answer
T
question
Assets are owned by creditors or owners.
answer
F
question
The normal balance of revenue accounts is a credit.
answer
T
question
The process of recording a transaction in the journal is called journalizing.
answer
T
question
The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.
answer
F
question
The post reference notation used in the ledger is the account number.
answer
F
question
The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.
answer
F
question
A debit is abbreviated as Db and a credit is abbreviated as Cr.
answer
F
question
The accounts payable account is listed in the chart of accounts as an asset.
answer
F
question
Unless the transaction is compound, the dollar amount of the debits for each transaction is equal to the dollar amount of the credits for that transaction, and thus the term double-entry bookkeeping..
answer
F
