Financial And Managerial Accounting 15th Edition By jan Williams -Test Bank
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Accounting fundamentals
Institution
Accounting Fundamentals
Financial And Managerial Accounting 15th
Edition By jan Williams -Test Bank
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Sample Test
Chapter 03
The Accounting Cycle: Capturing Economic Events...
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Sample Test
Chapter 03
The Accounting Cycle: Capturing Economic Events
True / False Questions
1. The credit side of an account is the right side, while the debit side is the left side.
True False
2. In a computerized accounting system, posting may be done automatically but journalizing
must be done by someone with an understanding of recording transactions.
True False
,3. The running balance form or the T account form is typically used in the trial balance to
display the accounts and their amounts.
True False
4. Dividends are an expense of a corporation and reduce both total assets and liabilities.
True False
5. Dividends increase owners’ equity and therefore should be added to retained earnings.
True False
6. Every business transaction is recorded by a debit to a balance sheet account and a credit to
an income statement account.
True False
7. Earning revenue increases owners’ equity and expenses reduce owners’ equity, therefore,
revenues are recorded with debit entries and expenses are recorded with credit entries.
True False
8. A trial balance cannot be distributed to stockholders in lieu of a balance sheet.
True False
9. Accounts are usually arranged in the ledger in financial statement order, that is, assets first,
followed by liabilities, owners’ equity, expenses, and revenues.
True False
10. A credit to a ledger account refers to the entry of an amount on the right side of an account.
True False
,11. The left-hand side of an account is used for recording debits and the right-hand side for
recording credits.
True False
12. If the number of debit entries in an account is greater than the number of credit entries, the
account will have a debit balance.
True False
13. Liability accounts should only be debited and never credited.
True False
14. Increases in owners’ equity are recorded by credits; increases in assets and in liabilities are
recorded by debits.
True False
15. When making a general journal entry, there can only be one debit and one credit.
True False
16. A business that is profitable and liquid will have more accounts with credit balances than with
debit balances.
True False
17. Every transaction affects equal numbers of ledger accounts and is recorded by equal dollar
amounts of debits and credits.
True False
18. When a company uses the double-entry method, the total dollar amount of debits recorded
must equal the total dollar amount of credits recorded, but the number of debit and credit entries
may differ.
, True False
19. If ledger accounts are maintained in three-column, running balance form, the journal should
be maintained in the same format.
True False
20. The general ledger is sometimes called the book of original entry because it is the
accounting record where transactions are first recorded.
True False
21. Each business transaction is initially recorded in a journal and later transferred to the
appropriate accounts in the general ledger.
True False
22. The matching principle refers to the relationship between revenues and expenses.
True False
23. An increase in a liability is recorded by a credit; an increase in owners’ equity by a debit.
True False
24. Revenues increase owners’ equity and are, therefore, recorded by crediting the revenues
account.
True False
25. The accrual basis of accounting recognizes expenses only when they are paid.
True False
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