FBLA Accounting 1 – True/False – Flashcards
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Total current assets should always equal total current liabilities
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F
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The matching concept states expenses should be offset against revenue to determine net income
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T
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The balance sheet shows the financial position of a business over a period of time
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F
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analysis paper on which the financial condition of a business is conveniently summarized is a trial balance
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F
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Journal entries made to bring general ledger accounts up to date are adjusting entries
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T
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The complete series of activities involved in double-entry accounting during a fiscal period is the accounting cycle
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T
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If the debit part of a journal entry is not posted but the credit side is, assets will be understated.
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F
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A change in the balance of a customer's account also changes the balance of the controlling account, Accounts Receivable.
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T
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Each amount in the General Debit column of the combination journal is posted separately to an account in the general ledger.
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T
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If an adjusting entry is not recorded for supplies used during the accounting period, net income for the current period will be overstated.
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T
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If the totals on the trial balance of the work sheet do not balance and the difference between the debits and credits is $9,000, it is possible that a slide error has been made.
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T
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If the totals on the trial balance of the work sheet do not balance and the difference between the debits and credits is $1,000, it is possible that a transposition error has been made.
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F
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If an adjustment is not recorded for unearned revenue that has been earned by year-end, net income for the current period will be overstated.
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F
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The Purchases account does not provide a continuous record of the cost of the goods on hand.
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T
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When prices are falling, LIFO generally results in a higher cost of goods sold and therefore helps reduce the tax liability.
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F
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Overstating ending inventory in the current period will understate the following year's net income.
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The endorsement on the check represents a promise to pay.
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The matching concept requires that the income statement for a time period be matched with the balance sheet of the same time period.
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F
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A deficit is reported in the stockholders' equity section of the balance sheet.
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(1) A professional organization, such as the American Institute of Certified Public Accountants, is a group of people who have common career interests.
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Being able to make decisions is an important skill for someone interested in becoming a musician.
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F
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Responsibility is one example of a personality trait.
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The more you know about yourself, the easier it will be to make career choices.
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The Internet is a source of educational and career information.
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In the U.S. economy, for-profit businesses are outnumbered by not-for-profit organizations.
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F
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One of the best ways to find out about particular careers is by talking to people who work in those fields.
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Once you decide upon a career, you will probably stay in that career for the rest of your life.
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F
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Most careers require some education or training beyond high school.
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On-the-job training provides an opportunity to learn the ins and outs of a particular job and get paid while you're learning.
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Today, most accounting work is still done with pencil and paper.
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F
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All businesses need accounting services.
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AT&T is an example of a not-for-profit organization.
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F
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A CPA is a person who has passed a national test and met specified experience and educational standards to become "certified" to practice accounting.
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A person's skills are the principles by which they live and are the core of their belief system.
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F
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Only businesses that earn a profit will have the economic resources to continue to operate.
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All types of businesses sell a product.
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F
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In a free enterprise system, businesses compete for customers.
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One advantage of owning your own business is that any financial gain from operating the business is yours.
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For accounting purposes, a business is an entity separate from its owners.
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A business owner must always get permission to operate from the state government.
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F
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Basic accounting rules and procedures differ from business to business.
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The corporation is the easiest form of business to organize.
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F
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All businesses set up their accounting systems in the same manner.
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F
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Corporations often start out as sole proprietorships or partnerships.
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A business is earning a profit if the selling price of its product covers the cost of the raw materials needed to make the product.
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F
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The life of a business is divided into specific periods for reporting purposes.
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A partnership can be owned by a more than two individuals.
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GAAP is a way to communicate financial information in a form understood by those interested in the operations and financial condition of the business.
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Service businesses are not intended to operate at a profit
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F
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After each transaction, the basic accounting equation should remain in balance.
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A business transaction affects at least two accounts.
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"Assets + Liabilities = Owner's Equity" is another way to express the basic accounting equation.
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The increases and decreases caused by business transactions are recorded in specific accounts.
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The free enterprise system is based on the right to own property.
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One of the purposes of accounting is to provide financial information about property and the rights to that property.
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The owner's claims to the assets of a business are liabilities.
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A creditor has a financial claim to the assets of a business.
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An account is a record of only the increases in the balance of a specific item such as cash or equipment.
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F
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The total financial claims do not have to equal the total cost of the property.
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F
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The top of the T account is used for account titles. Credits are entered on the left side of the T; debits, on the right.
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F
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Debit and credit rules for accounts on one side of the accounting equation are mirror images of those on the other side.
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T
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A credit to an account always increases it; a debit to an account always decreases it.
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F
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An asset account appears on the right side of the accounting equation and is also increased on the right side of its T account
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F
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The payment of a liability is recorded by a debit to the liability account and a credit to the owner's capital account.
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F
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Every transaction affects two or more accounts and is recorded by equal amounts of debits and credits.
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A business groups its accounts in a ledger.
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A business transaction can affect two accounts on the same side of the accounting equation and still leave the equation in balance.
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A chart of accounts is limited to 50 accounts.
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The difference between the debit and credit amounts in an account is the account balance.
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Liability, expense, and capital accounts all have normal credit balances.
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F
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Expenses decrease owner's equity and are recorded as debits.
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The rules of debit and credit for expense accounts are the same as the rules for asset accounts.
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A business should have separate accounts for recording revenue and expenses.
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Liability, revenue, and withdrawal accounts all have normal credit balances.
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F
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The withdrawal of cash by the owner of a business decreases owner's equity.
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Expenses have the opposite effect from revenue on the capital account.
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Temporary capital accounts are extensions of the owner's capital account.
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Permanent accounts start each accounting period with a zero balance.
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Revenues increase owner's equity, and increases in revenues are recorded as debits.
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F
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The total of all accounts with normal debit balances should equal the total of all accounts with normal credit balances if the rules of debit and credit were followed correctly.
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T
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Income from Fees is a permanent account.
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F
