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1
The accounting cycle is the sequence of accounting procedures used to record, classify, and summarize accounting information.
A)True
B)False
2
The condition of being held responsible for one's actions by the existence of an independent record of those actions is called accountability.
A)True
B)False
3
The accounting cycle begins with the initial recording of business transactions and concludes with the preparation of the financial statements.
A)True
B)False
4
The accounting cycle generally consists of nine specific steps.
A)True
B)False
5
The last step in the accounting cycle is the preparation of an after-closing trial balance.
A)True
B)False
6
One of the roles of accounting records is to maintain documentary evidence of the company's business activities.
A)True
B)False
7
A record used to summarize all increases and decreases in a particular asset, such as cash, or any other type of asset, liability, owners' equity, revenue, or expense is called a ledger.
A)True
B)False
8
An accounting system includes a separate record for each item that appears in the financial statements. Collectively, these records are referred to as a company's journal.
A)True
B)False
9
The simplest form of an account is the T account.
A)True
B)False
10
A credit is an amount entered on the right-hand side of a ledger account.
A)True
B)False
11
An amount entered on the left-hand side of a ledger account is called a debit.
A)True
B)False
12
If a T account has debit entries totaling $45,000 and credit entries totaling $34,000, it has a debit balance of $11,000.
A)True
B)False
13
If a T account has a debit balance, it is always an asset account.
A)True
B)False
14
Asset accounts are debited for increases and liability accounts are credited for increases.
A)True
B)False
15
A system of recording every business transaction with equal dollar amounts of both debit and credit entries is called double-entry accounting.
A)True
B)False
16
One of the basic rules of double-entry accounting is that the total of all debits and the total of all credits must be equal.
A)True
B)False
17
A chronological record of transactions, showing for each transaction the debits and credits to be entered in specific ledger accounts, is called a journal.
A)True
B)False
18
The general journal is the simplest type of journal, it has only two money columns-one for credits and one for debits.
A)True
B)False
19
Recording journal entries requires little, if any, analytical ability.
A)True
B)False
20
The process of transferring information from the journal to individual accounts in the ledger is called posting.
A)True
B)False
21
The sale of capital stock increases owner's equity.
A)True
B)False
22
There is no net change in the balances of the accounting equation when land is purchased for $100,000 cash on January 1.
A)True
B)False
23
When land is purchased on January 1 by issuing a check for $10,000 and signing a note payable for the balance of $40,000, the accounting equation will not be in balance.
A)True
B)False
24
When land with an historical cost of $60,000 is sold on January 1 for cash of $60,000, the accounting equation will be in balance.
A)True
B)False
25
The purchase of $4,000 of factory tools on credit, on January 1, will require a debit to an asset account and a credit to a liability account.
A)True
B)False
26
The sale of $200 of office supplies to a next-door company on credit, on January 1, will require a debit to an asset account and a credit to a liability account.
A)True
B)False
27
The collection of a $4,000 account receivable on January 10 will require a debit to an asset account and credit to an owners' equity account.
A)True
B)False
28
The payment of a $5,000 account payable on January 15 will require a debit to a liability account and a credit to an asset account.
A)True
B)False
29
When an account receivable of $1,000 is collected on January 15, owners' equity increases.
A)True
B)False
30
An increase in owners' equity resulting from profitable operations is called net income.
A)True
B)False
31
The ending balance of the Cash account includes the amount of net income earned during the accounting period.
A)True
B)False
32
A corporation's distributions of resources to its stockholders are called dividends.
A)True
B)False
33
The balance in the retained earnings account represents the total income and deductions for dividends for the accounting period being reported.
A)True
B)False
34
Any 12-month accounting period adopted by a business is called a calendar year.
A)True
B)False
35
The accounting period is the span of time covered by an income statement.
A)True
B)False
36
The matching principle requires that to provide the users of financial statements with timely information, that net income be measured for relatively short accounting periods of equal length.
A)True
B)False
37
When revenue should be recognized is governed by the realization principle.
A)True
B)False
38
The generally accepted accounting principle (GAAP) that determines when revenue should be recorded in the accounting records is called the realization principle.
A)True
B)False
39
The costs of the goods and services used up in the process of obtaining revenue are called expenses.
A)True
B)False
40
The generally accepted accounting principle (GAAP) that determines when expenses should be recorded in the accounting records is called the matching principle.
A)True
B)False
41
An expense always causes a decrease in owners' equity.
A)True
B)False
42
The conservatism concept is based on the notion that accountants should avoid overstatement of financial strength or earnings of the entity..
A)True
B)False
43
Accountants' preference for using dollar amounts that are relatively factual, as opposed to merely matters of personal opinion, is called objectivity.
A)True
B)False
44
All expenditures benefiting more than one time period can be precisely divided by accounting periods.
A)True
B)False
45
The accrual basis of accounting calls for recording revenue in the accounting period in which it is earned and recording expenses in the accounting period in which they are incurred.
A)True
B)False
46
The cash basis of accounting provides a good measure of the profitability of activities undertaken during the period.
A)True
B)False
47
Revenues are recorded by credits because revenues increase owners' equity.
A)True
B)False
48
Expenses are recorded as debits because they require the use of cash.
A)True
B)False
49
Dividends are recorded as credits because they decrease owners' equity.
A)True
B)False
50
If, on February 1, $5,000 of radio announcements purchased on January 1 and charged to accounts payable is paid, the consequence of the payment will result in the totals of the accounting equation remaining unchanged.
A)True
B)False
51
The payment of $4,000 of previously unrecorded employee wages on January 31 will decrease owners' equity.
A)True
B)False
52
On January 1, an agreement was reached for $5,000 of radio announcements, scheduled to run in January, to be paid in February. As a consequence of the agreement, assets, liabilities and owners' equity remained unaffected.
A)True
B)False
53
Recording the delivery of $5,000 of services charged to customers on January 21 will increase both sides of the accounting equation.
A)True
B)False
54
The $3,000 cash that a customer pays on January 10 for delivery of accounting services will increase owners' equity.
A)True
B)False
55
The January 27th payment of a previously unrecorded telephone bill of $1,200 will not affect owners' equity.
A)True
B)False
56
The March 31 payment of a $45,000 cash dividend to stockholders will decrease owners' equity.
A)True
B)False
57
A two-column schedule listing the names and the debit or credit balances of all accounts in the ledger is called a trial balance.
A)True
B)False
58
An 'in balance' trial balance is proof that no errors occurred during recording or posting.
A)True
B)False
59
The accounting cycle is but one of several accounting processes.
A)True
B)False
60
Computers make it possible for accountants to focus more on the analytical aspects of their discipline.
A)True
B)False





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