Accounting True and False
When cash is received from a sale, the total amount of both assets and owner's equity is increased
True
When items are bought and paid for later this is referred to as buying on account
True
When the petty cash fund is replenished, the balance of the petty cash account increases
True
When two column totals are not in balance on the worksheet, the difference between the two totals is calculated and checked
True
When writing a check, the first step is to prepare the check stub
True
With the exception of the totals lines, the post Ref. column is completely filled in with either an account number or a check mark
True
he first digit of account numbers for accounts in the owner's equity ledger division is 3
True
Information needed to prepare an income statement comes from the trial balance columns and the income statement columns of a worksheet
False
Journals, ledgers, and worksheets are considered permanent records
False
Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime
False
Net income on a worksheet is calculated by subtracting the Income Statement Credit column total from the Income Statement Debit column total
False
Recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept
False
Separate amount in general amount columns are not posted individually
False
Separate amounts in special amount columns are posted individually
False
TechKnow Consulting arranges expense accounts in chronological in its general ledger
False
TechKnow Consulting maintains a petty cash fund for making large cash payments without writing checks
False
An outstanding check is one that has been issued but not yet reported on a bank statement by the bank
True
Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment
True
Assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a buisness
True
Banks deduct service charges from customers' checking accounts without without requiring customers to write a check for the amount
True
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
True
Businesses use petty cash when writing a check is not time or cost effective
True
Double lines across column totals mean that the totals have been verified as correct
True
Double lines are ruled across the balance sheet columns to show the column totals have been verified
True
Errors in general ledger accounts should never be erased
True
The accounting concept Realization of Revenue is applied when revenue is recorded at the time goods or services are sold
True
The amount of a check is written twice on each check
True
The asset division accounts for TechKnow Consulting are numbered in the 100s
True
The calculator tape is the source document for daily sales
True
The capital account is an owner's equity account
True
The four questions asked when analyzing an adjustment are: Why? Where? When? and How?
True
The income statement's account balances are obtained from the work sheet's Income Statement columns
True
The journal columns used to record paying cash for rent are general debit and cash credit
True
The journal columns used to record paying cash to the owner for personal use are general debit and cash credit
True
The journal columns used to record receiving cash from sales are cash debit and sales
True
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
True
The owner's equity section of a balance sheet may report different kinds of details about owner's equity, depending on the need of the buisness
True
The position of the total asset line on the balance sheet is determined after the equities section is prepared
True
The relationship among assets, liabilities, and owner's equity can be written as an equation
True
The source document for a debit card purchase is a memorandum
True
The source document for an electronic funds transfer is a memorandum
True
The source document used when supplies are bought on account is a memorandum
True
The source document used when supplies bought on account are paid for is check
True
The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense
True
To prove a journal page, the total debit amounts are compared with the total credit amounts to be sure they are equal
True
Totaling and ruling the Adjustments columns of a work sheet is necessary to prove the equality of debits and credits
True
Two financial statements are prepared from the information on the work sheet
True
When a deposit is made in a bank account, the bank issues a reciet
True
When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515
True
If the difference between the totals of Debit and Credit columns on a worksheet can be evenly distributed by 9, then the error is most likely in addition
False
If two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance
False
A memorandum is the source document for the entry to record establishing a petty cash fund
False
All companies should have a total expenses component percentage that is not more than 80.0%
False
An amount written in parentheses on a financial statement indicates an estimate
False
Because cash transactions occur more frequently than other other transactions, the chances for making recording errors affecting cash are less
False
Component percentages on an income statement are calculated by dividing sales and total expenses by net income
False
Dollars and cents signs and decimal points should be used when writing amounts on ruled accounting pages
False
Examples of source documents include checks, sales invoice, memorandums, and letters
False
The accounting concept Consistent Reporting is being applied when a delivery business reports revenue for the number of deliveries made one year and the amount of revenue received for the deliveries made the next year
False
The accounting equation does not have to be in balance to be correct
False
The best way to prevent errors is to use a calculator
False
The cash account is the first asset account and is numbered 100
False
The income statement for a service business has five sections: heading, revenue, expenses, net income or loss, capital
False
The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by check
False
The last two digits in a 3-digit account number indicate the general ledger division of the account
False
The net income on an income statement is verified by checking the balance sheet
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 interuptedd
False
The owner's capital amount reported on a balance sheet is determined after the equities section is prepared
False
The second division of TechKnow Consulting's chart of accounts is the owner's equity division
False
The source document for all cash payments is a sales invoice
False
The source document sales invoice is abbreviated as SI in a journal entry
False
The sum of the assets and liabilities of a business always equals the investment of the business owner
False
The totals of special amount columns in a journal are not posted
False
The two accounts affected by the adjustment for insurance are Prepaid Insurance Expense and Insurance
False
The two steps for opening an account are writing the account title and recording the balance
False
There are four types of endorsements commonly used: blank, special, original, and restrictive
False
To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place
False
When a business has two different sources of revenue, a separate income statement should be prepared for each kind of revenue
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
False
When a company receives cash from a customer for a prior sale, the transaction increases the cash account balance and increases the accounts receivable balance
False
When cash is paid for expenses, the business has more equity
False
When cash is paid on account, a liability is increased
False
A balance sheet reports financial information on a specific date and includes the assets, liabilities, and owner's equity
True
A balance sheet reports information about the elements of the accounting equation
True
A check is the source document used when items are paid in cash
True
A check mark in parentheses below a General Debit column total indicates that the total is not posted
True
A check that contains errors must be marked with the word VOID and another check must be written
True
A check with a blank endorsement can be cashed by anyone who has possession of the check
True
A component percentage is the percentage relationship between one financial statement item and the total that includes the sum
True
A receipt is the source document for cash received from transactions other than sales
True
A sale for which cash will be received at a later date is called a charge sale
True
A withdrawal decreases owner's equity
True
Accounting is the language of buisness
True
All general ledger account titles are listed on a trial balance in the same order as listed on the chart of accounts
True
An accounting period is also known as a fiscal period
True
An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement
True
An income statement reports information over a period of time, indicating the financial progress of a business in earning a net income or net loss
True
If errors are found on a worksheet, they must be erased and corrected before any further work is completed
True
If there are errors in the worksheet's Trial Balance columns, it might be because not all general ledger account balances were copied in the Trial Balance column correctly
True
Information is a journal includes the debit and credit parts of each transaction recorded on one place
True
Keeping personal and business records separate is an application of the business entity concept
True
Most errors occur in doing arithmatic
True
Not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the amount of the check from the account aswell
True
Single lines are ruled across the an amount column of an income statement indicate that amounts are to be added
True
Stakeholders are any persons or groups who will be affected by an action
True
The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition
True
The Objective Evidence accounting concept requires that there be proof that a transaction did occur
True
