true false accounting

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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


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