Principles of Accounting T/F and Multiple choice
Which accounting concept applies when financial statements are prepared from information on the worksheet?
Adequate Disclosure
Information needed to prepare a balance sheet assets section is obtained from a work sheet's Account Title column and ____.
Balance Sheet Debit column
When cash is paid for utilities, the amount is recorded in the ____.
Cash Credit column and General Debit column
A balance sheet reports financial information over a specific period of time
F
A transaction recorded in a journal is not considered a permanent record.
F
Accounts payable accounts are increased with a debit.
F
An amount recorded on the left side of a T account is a credit
F
Blank endorsements should be used when sending checks through the mail
F
Cash is increased with a credit.
F
Increases in expense accounts are recorded directly in the owner's capital account.
F
Increases in revenue accounts are recorded as debits because they increase the owner's capital account.
F
Information needed to prepare an income statement comes from the Trial Balance columns and the Income Statement columns of a work sheet.
F
Journals, ledgers, and work sheets are considered permanent records
F
Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime
F
Most banks will accept postdated checks
F
The day of the month is written on each journal page only for the first entry.
F
The normal balance side of an accounts receivable account is a credit.
F
The source document sales invoice is abbreviated as SI in a journal entry
F
Transactions are recorded in a journal in alphabetical order.
F
When an owner invests cash in a business, owner's equity decreases.
F
When cash is paid on account, a liability is increased.
F
Information needed to prepare an income statement's revenue section is obtained from a work sheet's Account Title column and ____.
Income Statement Credit column
On a work sheet, the balance of the Sales account is extended to the ____.
Income Statement Credit column
On a work sheet, the balance of an expense account is extended to the ____.
Income Statement Debit column
After the adjusting entry for Prepaid Insurance has been posted, Insurance Expense has an up-to-date balance, which is the ____.
value of insurance premiums used during the fiscal period
Information needed to journalize a closing entry for revenue is obtained from the ____.
work sheet's Income Statement Credit column
Information needed to journalize a closing entry for expenses is obtained from the ____.
work sheet's Income Statement Debit column
Information needed for recording the closing entries is obtained from the ____.
work sheet's Income Statement and Balance Sheet columns
Temporary accounts begin each new fiscal period with a ____.
zero balance
The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period.
T
The Objective Evidence accounting concept requires that there be proof that a transaction did occur.
T
The balance of an account decreases on the side opposite the normal balance side.
T
The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.
T
The journal columns used to record receiving cash from sales are cash debit and sales credit
T
The only difference in the journal entry for a cash payment by check and a cash payment by electronic funds transfer is the source document
T
The source document for an electronic funds transfer is a memorandum.
T
The source document used when supplies are bought on account is a memorandum.
T
The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense.
T
The value of the prepaid insurance coverage used during a fiscal period is an expense.
T
Totaling and ruling the Adjustments columns of a worksheet is necessary to prove the equality of debits and credits
T
Using a calculator will help prevent errors in accounting records, but not all errors are due to incorrect calculations
T
When cash is paid for supplies, the supplies account is increased by a debit.
T
When items are bought and paid for at a future date, an other way to state this is to say these items are bought on account
T
The recording of debit and credit parts of a transaction is ____.
double-entry accounting
Debits must equal credits ____.
in all transactions
If the Trial Balance columns are not equal and the difference can by divided evenly by 9, the error most likely is ____.
in transposed numbers or a "slide"
A drawing account has a normal ____.
increased by a debit
When a business pays for insurance, Prepaid Insurance is ____.
increased by a debit
When cash is paid for rent, Rent Expense is ____.
increased by a debit
When total revenue is greater than total expenses, the difference is a ____.
net income
A single line ruled across the journal's amount columns indicates ____.
none of the above
Separate amounts in the Sales Credit column of a journal are ____.
none of the above
When cash is paid on account, ____.
one asset and one liability are changed
On each journal page, the month is written ____.
only for the first entry
Accounts used to accumulate information from one fiscal period to the next are ____ accounts.
permanent
Determining that the amount of cash agrees with the accounting records is ____.
proving cash
When cash is received from sales, the change in the owner's equity is usually ____.
recorded in a separate revenue account
An endorsement on the back of a check consisting of the words "Pay to the order of" and a new check owner's name is a ____.
special endorsement
Accounts used to accumulate information until it is transferred to owner's capital accounts are ____ accounts.
temporary
The normal balance side of any revenue account is ____.
the credit side
The normal balance side of any expense account is ____.
the debit side
At the end of a month, even if the journal page is not filled, ____.
the journal page is proved and ruled
A check must be signed with ____.
the same signature as on the signature card
The formula for calculating the total expenses component percentage is ____.
total expenses divided by total sales equals total expenses component percentage
Decreases in any liability account are shown on a T account's ____.
debit side
The entry to record receipt of cash from the owner as an investment is ____.
debit Cash, credit Capital
Total assets are $19,500.00. Cash is paid for $1,500.00 of supplies. The total assets are now ____.
$19,500.00
The bank statement shows a checking account balance of $5,500.00. There are outstanding checks totaling $600.00, an outstanding deposit of $400.00, and a bank service charge of $15.00. The checking account balance should be ____.
$5,300.00
Recording revenue from business activities and expenses associated with earning that revenue in the same accounting period is an application of the accounting concept ____.
Matching Expenses with Revenue
The last step in the accounting cycle is ____.
None of the above
The amount paid for rent is recorded as a debit to ____.
Rent Expense
The account debited when cash is paid for supplies is ____.
Supplies
A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity
T
A business form giving written acknowledgement for cash received is a receipt
T
A calculator tape is the source document for daily cash sales.
T
A check is a business form ordering a bank to pay cash from a bank account.
T
A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.
T
A record summarizing all the information pertaining to a single item in the accounting equation is an account.
T
A trial balance is a proof of the equality of debits and credits in a general ledger
T
All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts.
T
An important aspect of cash control is verifying that the information on a bank statement and in a checkbook is in agreement
T
Asset accounts are listed on the left side of the accounting equation
T
Assets such as cash and supplies have value because they can be used to acquire other assets or to operate a business.
T
Double lines are ruled across a journal's amount columns to indicate that the totals have been verified as correct.
T
Double lines are ruled across the balance sheet columns to show that the column totals have been verified as correct.
T
If a new account is located between accounts numbered 210 and 220, the new account number should be 215.
T
In accounting, money is usually referred to as cash
T
Individuals or other businesses to which a business owes money have rights to the business's assets
T
Most errors occur in doing arithmetic.
T
Separate amounts in a Sales Credit column are not posted individually.
T
An endorsement on the back of a check consisting only of a signature is ____.
a blank endorsement
Buying items and paying for them at a future date is ____.
a common business practice
When supplies are bought on account, the business to whom money is owed is ____.
a liability account
A columnar form used to summarize general ledger information needed to prepare financial statements is ____.
a work sheet
Information needed to journalize a closing entry for the income summary account is obtained from ____.
a work sheet's net income or net loss line
If an error is recorded in a journal entry, ____.
all of the above
A record summarizing all the information pertaining to a single item in the accounting equation is ____.
an account
A lost check with a blank endorsement on it can be cashed by ____.
anyone who has the check
Decreases in an asset account are shown on a T account's ____.
credit side
The right side of a T account is the ____.
credit side