ACC 221 exam 1 true/false

a company's account period must always be one month long

f

a transaction which decreases the retained earnings account must always decrease an asset account to keep the accounting system in balance

f

adjusting entries should be entered into the general journal and posted the general ledger accounts after preparing a pre-closing trial balance

f

after certain transactions it is ok for the accounting system to have more total assets than total liabilities + total equity

f

all entries must affect both the asset side and the liabilities + equity side of the accounting equation for the accounting system to stay in balance

f

as a result of the closing process all general ledger accounts will be reset to zero

f

asset accounts track the dollar amount of a physical asset and who has a claim to that physical asset

f

entries are posted from the general journal to the trial balance

f

expense accounts will always start each new accounting period with a beginning balance equal to all of the debit entries that were made into the expense account during the previous accounting period

f

in an accounting system if total assets are not equal to total claims to assets then the balance sheet report will simply be relabeled as the unbalance sheet report

f

some of the revenue and expense accounts are used to prepare the income statement and some of the revenue and expense accounts appear on the balance sheet

f

the balance sheet is produced from the general journal

f

the collection of cash from a customer will always result in an increase in the retained earnings account

f

the common stock account is decreased by a debit while the retained earnings account is increased by a debit

f

the common stock account tracks the owners' claim to assets that result from the operation of the business

f

the cost of goods sold account is an asset account similar to the inventory account

f

the debit side of an asset account is the left side and the debit side of a liability account is the right side

f

the largest transaction occurring during the accounting period is always entered first in the general journal

f

the note payable account is increased by a debit entry

f

the post closing trial balance should be prepared after the income stated but before the balance sheet

f

the retained earnings account is an asset account similar to the inventory account

f

the retained earnings amount on the post closing trial balance will always be greater than the retained earnings amount on the pre closing trial balance

f

the trial balance lists all of the individual transactions that were entered into the asset, liability, and equity accounts

f

when a sale is made to a customer on credit there is no entry made to the sales revenue account because no cash has been received

f

when a transaction increases a company's accounts receivable account the retained earnings account must be decreased to keep the accounting system in balance

f

a company will have a net loss when the sum of all the expense accounts is greater than the sum of all the revenue accounts

t

credit amounts entered into the sales revenue account increase the account balance and will ultimately increase retained earnings

t

debit amounts entered into an expense account increase the expense account and will ultimately decrease retained earnings

t

during the closing process for expense accounts, the retained earnings account is debited, which decreases RE

t

during the closing process for revenue accounts, the retained earnings accounts is credited, which increases RE

t

for each entry in the general journal, the total dollar amount of the debits and the total dollar amount of the credits must always be equal

t

if the sum of the ending balance in the revenue account is greater than the sum of the ending balances in the expense accounts , then RE will increase as a result of the closing entries

t

if there was no need to prepare the income statement then there would be no need to have revenue and expense accounts

t

in a traditional accounting system all entries must be first put in the general journal

t

in an accounting system that uses debits and credits, only positive numbers will be put into the accounts

t

revenue accounts will always start each new accounting period with a beginning balance of zero

t

the after close balance for both revenue and expense accounts should always be a zero balance

t

the asset account balances, liability account balances, and the common stock account balance will always be the same on both the pre-closing trial balance and post closing trial balance

t

the balance sheet is a point in time financial report

t

the balance sheet is produced from the general ledger

t

the credit side of all accounts is the right side

t

the equipment account is increased by a debit entry

t

the inventory account is decreased by a credit entry

t

the main purpose of equity accounts is to keep track of owners' claims to an organization's assets

t

the main purpose of liability accounts is to keep track of non-owners' claims to an organization's assets

t

the payment of wages to employees for work they performed during the current accounting period will result in a credit to the cash account

t

the primary reason the account prepares a trial balance is to determine if the accounting system is in balance

t

the retained earnings account is similar to the common stock account in that they are both owners' claim to asset accounts

t

the retained earnings account tracks the owners' claim to assets that result from the operation of the business

t

the retained earnings amount needed for the balance sheet can be calculated as: current balance in RE + revenue balances - expense account balances

t

the sequence of steps a company's accounting system goes through each accounting period is called the accounting cycle

t

the temporary accounts should always have a zero balance on the post-closing trial balance

t

the retained earnings account is increased by a debit and decreased by a credit

f