Download Accounting True or False Questions and Answers and more Exams Accounting in PDF only on Docsity!
answers
Accounting is the language of business CORRECT ANSWERS✅ True. Keeping personal and business records separate is an application of the business entity concept CORRECT ANSWERS✅ True. Assets such as cash and supplies have value because the can be used to acquire other assets or be used to operate a business CORRECT ANSWERS✅ True The relationship among asserts, liabilities, and owner's equity can be written as an equation CORRECT ANSWERS✅ True The equation is called the accounting equation and does not have to be in balance to be correct CORRECT ANSWERS✅ False The sum of the assets and liabilities of a business always equal the investment of the business owner CORRECT ANSWERS✅ False Recording business costs in terms of hours required to complete projects and sales in terms of dollars is an application of the unit of measurement concept CORRECT ANSWERS✅ True The capital account is an owner's equity CORRECT ANSWERS✅ True If two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance CORRECT ANSWERS✅ False
answers
When cash is paid on account, a liability is increased CORRECT ANSWERS✅ False The Going Concern accounting concept affects the way financial statements are prepared CORRECT ANSWERS✅ True On a balance sheet, a single line means that amounts are to be added or subtracted CORRECT ANSWERS✅ True A transaction for the sale of goods or services is an increase in owner's equity CORRECT ANSWERS✅ True When cash is received for services performed, the asset account Cash is increased and the owner's equity account is decreased CORRECT ANSWERS✅ False Accounts Receivable is a liability account CORRECT ANSWERS✅ False Regardless of when payment is made when services are sold, the revenue should be recorded at the time of the same CORRECT ANSWERS✅ True A transaction that increases accounts receivable and increases owner's equity is a sale on account CORRECT ANSWERS✅ True Owner's equity is decreased by a sale on account CORRECT ANSWERS✅ False
answers
Three transactions that affect owner's equity are receiving cash on account, paying expenses, and paying for supplies bough ton account CORRECT ANSWERS✅ False A balance sheet may be prepared on any date CORRECT ANSWERS✅ True The accounts on the left side of the accounting equation are reported on the left side of the balance sheet CORRECT ANSWERS✅ True Few businesses need to prepare a balance sheet every day CORRECT ANSWERS✅ True The balance sheet reports the balanced of the asset, liability, and owner's equity accounts CORRECT ANSWERS✅ True The heading of a balance sheet contains the name of the business, name of the report, and date of the report CORRECT ANSWERS✅ True The accounts on the left side of the accounting equation include liabilities and owner's equity CORRECT ANSWERS✅ False The total of the left side of the balance sheet is equal to the right side, and these totals need not be on the same line CORRECT ANSWERS✅ False Asset accounts are shows on the right side of the balance sheet CORRECT ANSWERS✅ False
answers
Owner's equity accounts are presented above liability accounts on the balance sheet CORRECT ANSWERS✅ False When a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage CORRECT ANSWERS✅ True When items are bought and paid for later this is referred to as buying on account CORRECT ANSWERS✅ True Transactions are recorded in a journal in order by date and in one place CORRECT ANSWERS✅ True The Objective Evidence Accounting concept requires that there be proof that a transaction did occur CORRECT ANSWERS✅ True Examples of source documents include checks, sales invoices, memorandums, and letters CORRECT ANSWERS✅ False The source document for all cash payments is a sales invoice CORRECT ANSWERS✅ False A check is the source document used when items are paid in cash CORRECT ANSWERS✅ True
answers
To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place CORRECT ANSWERS✅ False Dollars and cents signs and decimal points should be used when writing amounts on ruled accounting pages CORRECT ANSWERS✅ False Because an account form has columns for the debit and credit balance of an account, it is often referred to as the balance-ruled account form CORRECT ANSWERS✅ True The asset division accounts for Encore Music are numbered in the 100s CORRECT ANSWERS✅ True The cash account is the first asset account and is numbered 100 CORRECT ANSWERS✅ False The second division of Encore Music's chart of accounts is the owner's equity division CORRECT ANSWERS✅ False The first digit of account numbers for accounts in the owner's equity ledger division is 3 CORRECT ANSWERS✅ True The last two digits in a 3-digit account number indicate the general ledger division of the new account CORRECT ANSWERS✅ False
answers
When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515 CORRECT ANSWERS✅ True Encore Music arranges accounts in chronological order in its general ledgers CORRECT ANSWERS✅ False The two steps for opening an account are writing the account title and recording the balance CORRECT ANSWERS✅ False Separate amounts in the special amount columns are posted individually CORRECT ANSWERS✅ False Separate amounts in the sales credit column are not posted individually CORRECT ANSWERS✅ True Separate amounts in general amount columns are not posted individually CORRECT ANSWERS✅ False The posting reference should always be recorded in the journal's post reference column before amounts are recorded in the ledger CORRECT ANSWERS✅ False The only reason for the post reference columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted CORRECT ANSWERS✅ False
answers
A check with a blank endorsement can be crashed by anyone who has the check CORRECT ANSWERS✅ True A check with a blank endorsement can be cashed by anyone who has the check CORRECT ANSWERS✅ True When writing a check, the first step is to prepare the check stub CORRECT ANSWERS✅ True Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime CORRECT ANSWERS✅ False The amount of a check is written twice on each check CORRECT ANSWERS✅ True A check that contains errors must be marked with the word VOID and another check must be written CORRECT ANSWERS✅ True An outstanding check is one that has been issued but not yet reported on a bank statement CORRECT ANSWERS✅ True An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement CORRECT ANSWERS✅ True Banks deduct service charges from customer's checking accounts without requiring customers to write a check from the account as well CORRECT ANSWERS✅ True
answers
Not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the check from the account as well CORRECT ANSWERS✅ True The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by check CORRECT ANSWERS✅ False The source document for a debit card purchase is memorandum CORRECT ANSWERS✅ True Encore Music maintains a petty cash fund for making large cash payments without writing checks CORRECT ANSWERS✅ False Using a petty cash fund usually decreases the number of checks that have to be written CORRECT ANSWERS✅ False A memorandum is the source document for the entry to record establishing a petty cash fund CORRECT ANSWERS✅ False Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment CORRECT ANSWERS✅ True When the petty cash fund is replenished, the balance of the petty cash account increases CORRECT ANSWERS✅ False
answers
Net income on a worksheet is calculated by subtracting the income statement credit column total from the income statement debit column total CORRECT ANSWERS✅ false if errors are found on a worksheet, they must be erased and corrected before any further work is completed CORRECT ANSWERS✅ True When two column totals are not in balance on the worksheet, the difference between the two totals is calculated and checked CORRECT ANSWERS✅ False If the difference between the totals of debit and credit columns on a worksheet can be evenly divided by 9, then the error is most likely in addition CORRECT ANSWERS✅ False If there are errors in the worksheets trial balance columns, it might be because not all general ledger account balanced were copied in the trial balance column correctly CORRECT ANSWERS✅ True Errors in general ledger accounts should never be erased CORRECT ANSWERS✅ True Most errors occur in doing arithmetic CORRECT ANSWERS✅ True Using a calculator will help prevent errors in accounting records, but not all errors are due to incorrect calculations CORRECT ANSWERS✅ True
