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| 1 | |
Exchanges between the entity and some other person or organization are called external transactions. |
| | A) | True |
| | B) | False |
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| 2 | |
Documents such as invoices, checks and promissory notes are known as source documents and are used as evidence to record transactions. |
| | A) | True |
| | B) | False |
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| 3 | |
Prepaid advertising is an example of an asset that will be consumed in the operation of the business; and as it is consumed, it will become an expense for the time period in which it was consumed. |
| | A) | True |
| | B) | False |
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| 4 | |
When a firm collects money in advance of providing a service or delivering a product to a customer, the amount should be recorded as an unearned revenue. |
| | A) | True |
| | B) | False |
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| 5 | |
Interest Payable, Accounts Payable, Notes Payable, Land, and Unearned Revenues are all classified as liability accounts. |
| | A) | True |
| | B) | False |
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| 6 | |
Receivables are classified as assets accounts and payables are classified as liabilities accounts. |
| | A) | True |
| | B) | False |
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| 7 | |
Liabilities created when customers pay in advance for products or services are called prepaid assets. |
| | A) | True |
| | B) | False |
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| 8 | |
The owner's Capital account will increase with additional investment(s), increase with net loss (revenues smaller than expenses) and decrease with withdrawals by the owner. |
| | A) | True |
| | B) | False |
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| 9 | |
An unconditional written promise to pay a supplier a definite sum of money on demand or on a defined future date(s) is called a note payable. |
| | A) | True |
| | B) | False |
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| 10 | |
A ledger is the book of final entry and contains all accounts used by a business. |
| | A) | True |
| | B) | False |
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| 11 | |
In the chart of accounts, expenses are usually numbered in the 400's followed by revenues numbered in the 500's. |
| | A) | True |
| | B) | False |
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| 12 | |
The term debit, as it is used in recording journal entries, refers to the right side of the account. |
| | A) | True |
| | B) | False |
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| 13 | |
The T-account is a simple account form used as a helpful tool in showing the effects of transactions and events on specific accounts and is only used for asset accounts. |
| | A) | True |
| | B) | False |
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| 14 | |
Debit entries increase asset and expense accounts and decrease liability, owner's equity (except withdrawals), and revenue accounts. |
| | A) | True |
| | B) | False |
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| 15 | |
All transactions, except the most complex, can be recorded in a general journal under the double-entry accounting system. |
| | A) | True |
| | B) | False |
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| 16 | |
The left side of an account is always the debit side and always the decrease side. |
| | A) | True |
| | B) | False |
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| 17 | |
Accounts Payable, Taxes Payable, Unearned Revenue, and Rental Revenue are accounts that will increase when credited. |
| | A) | True |
| | B) | False |
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| 18 | |
Assume the beginning balance in the Accounts Payable account is a $7,000 credit balance. During the month, $1,700 of debits and $800 of credits are posted. The ending balance in the accounts payable account is a $7,900 credit balance. |
| | A) | True |
| | B) | False |
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| 19 | |
A journal is known as a book of original entry. |
| | A) | True |
| | B) | False |
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| 20 | |
A journal entry in which more than two accounts are involved is known as a complex journal entry. |
| | A) | True |
| | B) | False |
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| 21 | |
Posting is the process of recording transactions in a journal. |
| | A) | True |
| | B) | False |
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| 22 | |
Transcribing the debit amounts and the credit amounts from the general journal to the accounts in the ledger for summarization is known as journalizing. |
| | A) | True |
| | B) | False |
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| 23 | |
An account is a separate location in an accounting system, which is used in recording and summarizing the increases and decreases in each type of revenue, expense, asset, liability, or owner's equity item. |
| | A) | True |
| | B) | False |
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| 24 | |
The normal balance for assets, expenses and revenues is a debit balance. The normal balance for liabilities and equities (except withdrawals) is a credit balance. |
| | A) | True |
| | B) | False |
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| 25 | |
When the Accounts Receivable account has debits totaling $5,400 and credits totaling $4,800 its balance is normal balance of $600. |
| | A) | True |
| | B) | False |
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| 26 | |
The determination of whether an account has a debit or credit ending balance is based on the number of debits and credits posted during the period. |
| | A) | True |
| | B) | False |
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| 27 | |
Manual posting is more complicated and time consuming than electronic posting. |
| | A) | True |
| | B) | False |
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| 28 | |
A list of all the accounts with balances, and their respective balances, is called a trial balance. |
| | A) | True |
| | B) | False |
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| 29 | |
A trial balance with equal debit and credit totals is proof that no errors occurred in the journalizing or posting procedures used by the bookkeeper. |
| | A) | True |
| | B) | False |
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| 30 | |
An unbalanced trial balance with a $58,940 debit balance and a $54,490 credit balance may have resulted from a transposition. |
| | A) | True |
| | B) | False |
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| 31 | |
A high debt ratio indicates that the company may have some difficulty paying existing debt or borrowing additional cash. |
| | A) | True |
| | B) | False |
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| 32 | |
The debt ratio of a firm with total liabilities of $225,000 and total assets of $500,000 is equal to .45 or 45%. |
| | A) | True |
| | B) | False |
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| 33 | |
Accrued liabilities are amounts owed by a company for a variety of items such as wages, taxes and interest. |
| | A) | True |
| | B) | False |
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