Accounting (true & false)
A transaction recorded in a journal is not considered a permanent record.
False
When an entry in an amount column is an even dollar amount, either "00" or "--" can be entered in the cents column.
False
Payments for advertising, equipment repairs, utilities, and rent are liabilities.
False
The accounting concept Unit of Measurement is being applied when a source document is prepared for each transaction.
False
The accounting equation is most often stated as Assets + Liabilities = Owner's Equity
False
The balance of an account decreases on the same side as the normal balance side.
False
The journal columns used to record receiving cash from the owner as an investment are Cash Debit and Sales Credit.
False
The owner's equity account is increased on the debit side because the owner's capital account has a normal balance on the debit side.
False
The steps for posting are to write the date, the journal page, the amount, and the balance.
False
To correct an error in a journal, one can simply erase the incorrect item and write in the correct item.
False
Increases in revenue accounts are recorded as credits because they increase the owner's capital account.
True
Keeping separate the financial records for a business and for its owner's personal belongings is an application of the Business Entity accounting concept.
True
Maya Abbasi, Capital is decreased with a debit.
True
The right side of a liability account is the normal balance side because liabilities are on the right side of the accounting equation.
True
When an owner withdraws cash from the business, the transaction affects both assets and owner's equity.
True
When items are bought and paid for at a future date, another way to state this is to say these items are bought on account.
True
Each liability account has a normal debit balance.
False
The two steps for opening an account are writing the account title and recording the balance.
False
A list of accounts used by a business is a chart of accounts.
True
Businesses use accounts to summarize all the information pertaining to a single item.
True
In double-entry accounting, each transaction affects at least two accounts.
True
Increases in expense accounts are recorded as credits because they increase the owner's capital account.
True
The accounting number is placed in the Post. Ref. column of the journal as the last step in the posting procedure.
True
The most common type of withdrawal by an owner from a business is the withdrawal of cash.
True
The normal balance side of an Accounts Payable account is a credit.
True
A journal shows, in one place, all the changes in a single account.
False
An amount recorded on the left side of a T account is a credit.
False
Every business uses the same journal to record transactions.
False
Increases in revenue accounts are recorded as debits because they increase the owner's capital account.
False
Maya Abbasi, Drawing is decreased with a debit.
False
Detailed information about changes in owner's equity is needed by owners and managers to make sound business decisions.
True
The source document for all cash payments is a check.
True
The source document used when supplies are bought on account is a memorandum.
True
Transactions are recorded in a journal in chronological order.
True
When two asset accounts are changed in a transaction, there must be an increase and a decrease.
True
Withdraws are assets taken out of a business for the owner's personal use.
True
A transaction for the sale of goods or services results in a decrease in owner's equity.
False
A complete journal entry consists of the date, the debit amount, the credit amount, and a source document.
True
A drawing account is increased by debits and decreased by credits.
True
A group of accounts is called a ledger.
True
Common accounting practice is to record withdrawals as debits directly in the owner's capital account.
False
A negative amount for net worth would reflect more debt than assets, something a creditor would favor.
False
A withdrawal is an expense.
False
Accounts receivable accounts are increased with a credit.
False
Asset accounts decrease on the debit side.
False
Business ethics are the principles of right and wrong that guide an individual in making decisions.
False
Cash is an asset account with a normal credit balance.
False
The posting reference should always be recorded in the journal's Post. Ref. column before amounts are recorded in the ledger.
Flas
A receipt is the source document for cash received from transaction other than sales.
True
Accounts payable accounts are increased with a credit.
True
After each transaction, the accounting equation must remain in balance.
True
An expense is a decrease in owner's equity resulting from the operation of a business.
True
Before a transaction is recorded in the records of a business, it is analyzed to determine which accounts are changed and how.
True
Cash is always proved at the end of a month.
True
Double lines are ruled across a journal's amount column to indicate the totals have been verified as correct.
True