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1
Posting journal information to the ledger accounts is the first step in the accounting process.
A)True
B)False
2
A trial balance is prepared after transactions have been journalized and posted in a ledger.
A)True
B)False
3
A ledger is used to prepare a journal of accounting transactions.
A)True
B)False
4
Source documents are used to identify and describe transactions and events entering the accounting process.
A)True
B)False
5
Checks, invoices, and sales receipts are examples of business papers or source documents.
A)True
B)False
6
Prepaid Insurance, Cash, Accounts Receivable, Notes Receivable, Land, and Unearned Revenues are all classified as asset accounts.
A)True
B)False
7
All receivables are classified as asset accounts and all payables are classified as liability accounts.
A)True
B)False
8
Liabilities created when customers pay in advance for products or services are called prepaid revenues.
A)True
B)False
9
Assets include cash, land, equipment, buildings, and accounts receivable and other resources owned and controlled by the company.
A)True
B)False
10
Another term for net assets is liabilities.
A)True
B)False
11
An account receivable is an asset created by buying goods or services on credit.
A)True
B)False
12
A note payable is a liability or an informal promise to make a future payment at a specific time.
A)True
B)False
13
Individuals or organizations entitled to receive payments from a company are called debtors.
A)True
B)False
14
Inflows of assets received in exchange for goods or services provided to customers as part of the major or primary operations of the business are called sales.
A)True
B)False
15
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 equity item.
A)True
B)False
16
When a firm collects money in advance of providing a service or delivering a product to a customer, the amount should be recorded as a prepaid asset.
A)True
B)False
17
Prepaid insurance 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
18
A ledger is a record containing all accounts used by a business.
A)True
B)False
19
A chart of accounts is a list of all accounts a company uses and their balances.
A)True
B)False
20
It is common for businesses to assign asset accounts with an account number beginning with 1 as the first digit.
A)True
B)False
21
The term debit, as it is used in recording journal entries, means to increase the balance of an account.
A)True
B)False
22
Credit entries increase asset and expense accounts and decrease liability, equity, and revenue accounts.
A)True
B)False
23
Any transaction, no matter how complex, can be recorded in a general journal under the double-entry accounting system.
A)True
B)False
24
A trial balance is a financial statement that is usually sent out to external investors.
A)True
B)False
25
The Sarbanes-Oxley Act requires repayment of bonuses that were based on income that was later restated.
A)True
B)False
26
When a balance sheet is presented with assets on the left and liabilities and equity on the right, this is called the account form.
A)True
B)False
27
Dollar signs must be used in both journals and ledgers.
A)True
B)False
28
With respect to the debt ratio, higher financial leverage involves greater risk.
A)True
B)False
29
The left side of an account is always the debit side and always the increase side.
A)True
B)False
30
Journalizing is the process of recording transactions in a journal.
A)True
B)False
31
Transferring the amounts from the journal to the ledger is known as the process of posting.
A)True
B)False
32
The normal balance for asset and expense accounts is a debit balance. The normal balance for liability, equity (except dividends), and revenue accounts is a credit balance.
A)True
B)False
33
Cash, Prepaid Insurance, Office Supplies, and Rent Expense are accounts that will increase when debited.
A)True
B)False
34
When a business pays cash for supplies, one asset account is debited and another asset account is credited.
A)True
B)False
35
The revenue recognition principle requires that revenue not be credited until cash is received from providing a service.
A)True
B)False
36
A compound journal entry includes exactly 2 accounts.
A)True
B)False
37
When equipment is bought on credit, a liability account will be debited.
A)True
B)False
38
When cash dividends are paid to stockholders, cash will decrease and equity will decrease.
A)True
B)False
39
A low debt ratio indicates that the company may have some difficulty paying existing debt or borrowing additional cash.
A)True
B)False
40
To calculate the debt ratio requires dividing the value of the total assets by the value of the total liabilities.
A)True
B)False
41
Common stock is a distribution of a company's assets to its shareholders.
A)True
B)False
42
Prepaid accounts are always properly classified as liabilities.
A)True
B)False
43
When the Cash account has debits totaling $4,700 and credits totaling $4,800, its balance is a normal balance of $100.
A)True
B)False
44
The T-account is a simple account form used as a helpful tool in showing the effects of transactions and events on specific accounts.
A)True
B)False
45
An account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted is called a balance column ledger account.
A)True
B)False
46
A journal is known as a book of final entry.
A)True
B)False
47
The normal post reference that one would expect to find in the journal is a page number.
A)True
B)False
48
The dividends account is an expense and would appear on the income statement.
A)True
B)False
49
A T-Account is a tool used to show effect of transactions and events on individual accounts.
A)True
B)False
50
The normal balance of any account is always on the debit side.
A)True
B)False
51
The unearned revenue account is properly placed on the income statement with all other revenue accounts.
A)True
B)False
52
A common abbreviation for a debit is Db.
A)True
B)False
53
A list of all the accounts with balances, and their respective balances, is called a balance sheet or statement of financial position.
A)True
B)False
54
A trial balance is helpful in reviewing accounts for abnormal balances.
A)True
B)False
55
Accounts in a trial balance are typically ordered by their balances, starting with the largest accounts first.
A)True
B)False
56
Debits are used to increase asset and expense accounts.
A)True
B)False
57
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
58
An unbalanced trial balance with a $45,680 debit balance and a $45,860 credit balance may have resulted from a transposition.
A)True
B)False
59
The balance sheet is the first financial statement to be prepared from the trial balance.
A)True
B)False
60
Revenues, expenses, and dividends are used to calculate net income.
A)True
B)False
61
Each financial statement should begin with a header listing the name of the organization, the name of the statement, and the statement's point in time or period of time.
A)True
B)False
62
All companies must use a calendar year (January 1 to December 31) for accounting reporting.
A)True
B)False
63
Net income, additional investment by stockholders, and dividends are reported on the balance sheet.
A)True
B)False





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