True False 4-6 – Flashcards
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True
answer
Transactions are entered in the journal in chronological order. 4
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False
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Transactions are recorded in either a journal or a ledger, but not in both. 4
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False
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An amount debited to Cash in a journal entry should be posted as a credit to the Cash account in the ledger. 4
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True
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A ledger account contains a complete record of the individual transaction activity in each account. 4
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True
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The Revenue account comes before the expense account in the general ledger. 4
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True
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Posting references provide a useful cross reference when entries must be traced and verified. 4
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True
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If a journal entry that contains an error has already been posted, a correcting entry should be journalized and posted. 4
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False
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If an error is discovered before the entry is posted, the incorrect amount can be erased and the correct amount recorded. 4
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True
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Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until they are used. 5
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False
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The balances of the revenue accounts are recorded in the Trail Balance credit column, the Adjusted Trail Balance credit column, and Balance Sheet credit column of the worksheet. 5
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False
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The balance of the owner's drawing account is extended to the Income Statement debit column of the worksheet. 5
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True
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The balance of a liability account is extended to the Balance Sheet credit column of the worksheet. 5
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False
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If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the ledger. 5
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True
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The entry to close the revenue account Fees Income requires a debit to that account. 6
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False
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The entry to close an expense account requires a credit to the Income Summary account. 6
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True
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"Closing" is written in the description column of the individual revenue and expense accounts in the general ledger. 6
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False
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The entry to transfer net income to the owner's capital account would include a debit to the owner's capital account. 6
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True
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Withdrawals by the owner for personal use do not affect net income or the net loss of the business. 6
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True
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After the closing entries are posted, the balance of the owner's capital account agrees with the amount of the owner's equity shown on the balance sheet for the period. 6
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True
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The temporary owner's equity accounts are closed because they apply to only one account period. 6
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True
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"Income and Expense Summary" is another name for the Income Summary account. 6
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True
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The heading "Closing Entries" is usually written in the description column of the general journal above the first closing entry. 6
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True
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Interpreting the financial statements is the last step in the accounting cycle. 6
