true false accounting
Closing the revenue and expense accounts reduces them to a zero balance.
True
Early applications of the computer in accounting were in the areas of payroll, accounts receivable, accounts payable, and inventory.
True
Subsidiary ledgers are often created for accounts receivable and accounts payable so that companies will know who owes them money and to whom they own money.
True
The closing process brings nominal (temporary) accounts to a zero balance.
True
The computer automatically performs steps in the accounting cycle such as posting journal entries to the ledger accounts, closing the books, and preparing the financial statements.
True
The final figure in the income statement is net income or net loss.
True
The financial statements are prepared before the adjusting and closing entries are journalized.
True
The functions performed by manual and computerized accounting systems are basically the same.
True
The income statement is normally the first financial statement prepared from the work sheet.
True
The net income figure from the Income Statement debit column is carried over to the Statement of Retained Earnings credit column.
True
The statement of retained earnings helps to relate income statement information to balance sheet information.
True
The two basic components of stockholders' equity are paid-in capital and retained earnings.
True
Because land does not depreciate, it is not considered part of plant assets.
False
Closing entries do not affect the Retained Earnings account.
False
If a company has a 2:1 current ratio, you can be sure of its current debt-paying ability.
False
If the Income Summary account has a debit balance before it is closed, the company has net income for the period.
False
Normally, only the beginning balance of the Retained Earnings account is shown on the balance sheet.
False
Once the adjusting entries have been entered on the work sheet, they need not be entered anywhere else.
False
The current ratio indicates the long-term debt-paying ability of a company.
False
The net income or loss of a company cannot be determined if closing entries are not made.
False
The post-closing trial balance will show asset, liability, stockholders' equity, revenue, and expense accounts.
False
A post-closing trial balance contains revenues and expenses.
False
A separate trial balance should be prepared before beginning the work sheet.
False
Accounts payable are generally classified as long-term liabilities because they are not due until after the balance sheet date.
False
Accumulated depreciation would be listed under long-term liabilities on a classified balance sheet.
False
Because it is an internal working paper rather than a published financial statement, the work sheet can vary in format.
True
A post-closing trial balance contains only asset, liability, Capital Stock, and Retained Earnings account balances.
True
An accounting system is a set of records and the procedures and equipment used to perform the accounting functions.
True
An adjustment may involve debiting an expense account and crediting the related asset account.
True
Assets are extended into the Balance Sheet columns as debits, liabilities as credits.
True
