Test Bank For Financial Accounting Fundermentals 3rd Edition
by Wild.
Chapter 01 Accounting for Transactions
True / False Questions
1. Accounting
... [Show More] records are also referred to as the books.
True False
2. The first step in the analyzing and recording process is to analyze each transaction and
event from source documents.
True False
3. Preparation of a trial balance is the first step in the analyzing and recording process.
True False
4. Source documents provide evidence of business transactions and are the basis for
accounting entries.
True False
5. Items such as sales slips, invoices, checks and purchase orders are source documents.
True False
6. An account is a record of increases and decreases in a specific asset, liability, equity,
revenue or expense item.
True False
7. According to the seller, a customer's promise to pay is called an account payable.
True False
2-1
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8. Dividends are a type of business expense.
True False
9. As prepaid expenses are used up, the costs of these assets become expenses.
True False
10. Land and buildings are generally recorded in the same ledger account.
True False
11. It is not necessary to keep separate accounts for all items of importance for business
decisions.
True False
12. Unearned revenues are classified as liabilities.
True False
13. Cash dividends should be treated as an expense to the business.
True False
14. When a company provides services for which cash will not be received until some future
date, the company should record unearned revenue for the amount charged to the customer.
True False
15. The chart of accounts is a list of all the accounts used by a company and a corresponding
identification number.
True False
2-2
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16. An account balance is the difference between the debits and credits for an account
including any beginning balance.
True False
17. Debit means the right-hand side of any account.
True False
18. In a double-entry accounting system, total amount debited must always equal total amount
credited.
True False
19. Increases in liability accounts are recorded as debits.
True False
20. Debits increase both asset and expense accounts.
True False
21. Credits always increase account balances.
True False
22. Crediting an expense account decreases it.
True False
23. Double entry accounting requires that the impact of each transaction be recorded in, at
least two accounts.
True False
2-3
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24. A revenue account normally has a debit balance.
True False
25. Accounts are normally decreased by debits.
True False
26. The dividends account normally has a credit balance since it is an equity account.
True False
27. Asset accounts normally have credit balances and expense accounts normally have debit
balances.
True False
28. Common Stock normally has a debit balance.
True False
29. A debit entry is always favorable.
True False [Show Less]