Financial Accounting 1

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1. A NEW ACCOUNT IS OPENED FOR EACH TRANSACTION ENTERED INTO BY A BUSINESS FIRM (true or false) FALSE
2. THE RECORDING PROCESS BECOMES MORE EFFICIENT & INFORMATIVE IF ALL TRANSACTIONS ARE RECORDED IN ONE ACCOUNT. (true or false) FALSE
3. WHEN THE VOLUME OF TRANSACTIONS IS LARGE, RECORDING THEM IN TABULAR FORM IS MORE EFFICIENT THAN USING JOURNALS & LEDGERS (true or false) FALSE
4. AN ACCOUNT IS OFTEN REFERRED TO AS A T-ACCOUNT BECAUSE OF THE WAY IT IS CONSTRUCTED. (true or false) TRUE
5. A DEBIT TO AN ACCOUTN ALWAYS INDICATES AN INCREASE IN THAT ACCOUNT. (true or false) FALSE
6. IF A REVENUE ACOUNT IS CREDITED, THE REVENUE ACCOUNT IS INCREASED. (true or false) TRUE
7. THE NORMAL BALANCE OF ALL ACCOUNT IS DEBT. (true or false) FALSE
8. DEBIT & CREDIT CAN BE INTERPRETED TO MEAN "BAD" & "GOOD" RESPECTIVELY. (true or false) FALSE
9. THE DOUBLE-ENTRY SYSTEM OF ACCOUNTING REFERS TO THE PLACEMENT OF A DOUBLE LINE AT THE END OF A COLUMN OF FIGURES. (true or false) FALSE
10. A CREDIT BALANCE IN A LIABILITY ACCOUNT INDICATES THAT AN ERROR IN RECORDING HAS OCCURRED. (true or false) FALSE
11. THE DIVIDENDS ACCT IS A SUBDIVISION OF THE RETAINED EARNINGS ACCT & APPEARS AS AN EXPENSE ON THE INCOME STATEMENT. (true or false) FALSE
12. REVENUE ARE A SUBDIVISION OF STOCKHOLDERS' EQUITY. (true or false) TRUE
13. UNDER THE DOUBLE-ENTRY SYSTEM, REVENUES MUST ALWAYS EQUAL EXPENSES. (true or false) FALSE
14. TRANSACTIONS ARE ENTERED IN THE LEDGER FIRST & THEN THEY ARE ANALYZED IN TERMS OF THEIR EFFECT ON THE ACCOUNT. (true or false) FALSE
15. BUSINESS DOCUMENTS CAN PROVIDE EVIDENCE THAT A TRANSACTION HAS OCCURRED. (true or false) TRUE
16. EACH TRANSACTION MUST BE ANALYZED IN TERMS OF ITS EFFECT ON THE ACCT BEFORE IT CAN BE RECORDED IN A JOURNAL. (true or false) TRUE
17. TRANSACTIONS ARE ENTERED IN THE LEDGER ACCT & THEN TRANSFERRED TO JOURNALS. (true or false) TRUE
18. ALL BUSINESS TRANSACTIONS MUST BE ENTERED FIRT IN THE GENERAL LEDGER. (true or false) FALSE
19. A SIMPLE JOURNAL ENTRY REQUIRES ONLY ONE DEBIT TO AN ACCOUNT & ONE CREDIT TO AN ACCOUNT. (true or false) TRUE
20. A COMPOUND JOURNAL ENTRY REQUIRES SEVERAL DEBITS TO ONE ACCOUNT & SEVERAL CREDITS TO ONE ACCOUNT. (true or false) FALSE
21. TRANSACTIONS ARE RECORDED IN ALPHABETICAL ORDER IN A JOURNAL. (true or false) FALSE
22. A JOURNAL IS ALSO KNOWN AS A BOOK OF ORIGNAL ENTRIES. (true or false) TRUE
23. A COMPLETE EFFECT OF A TRANSACTION ON THE ACCOUNTS IS DISCLOSED IN THE JOURNAL. (true or false) TRUE
24. THE ACCOUNT TITLES USED IN JOURNALIZING TRANSACTIONS NEED NOT BE IDENTICAL TO THE ACCOUNT TITLES IN THE LEDGER. (true or false) FALSE
25. THE CHART OF ACCOUNTS IS A SPECIAL LEDGER USED IN ACCOUNTING SYSTEMS. (true or false) FALSE
26. A GENERAL LEDGER SHOULD BE ARRANGED IN STATEMENT ORDER BEGINNING WITH THE BALANCE SHEET ACCOUNTS. (true or false) TRUE
27. THE # & TYPES OF ACCTS USED BY DIFFERENT COMPANYIES ARE THE SAME IF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE BEING FOLLOWED BY THE COMPANY FALSE
28. POSTING IS THE PROCESS OF PROVING THE EQUALITY OF DEBITS & CREDITS IN THE TRIAL BALANCE. (true or false) FALSE
29. AFTER A TRANSACTION HAS BEEN POSTED, THE REFERENCE OLUMN IN THE JOURNAL SHOULD NOT BE BLANK. (true or false) TRUE
30. A TRIAL BALANCE DOES NOT PROVE THAT ALL TRANSACTIONS HAVE BEEN RECORDED OR THAT THE LEDGER IS CORRECT. (true or false) TRUE
31. THE LEFT SIDE OF AN ACCOUNT IS? THE DEBIT SIDE
32. WHICH ONE OF THE FOLLOWING IS NOT A PART OF AN ACCOUNT? TRIAL BALANCE
33. AN ACCOUNT IS PART OF THE FINANCIAL INFORMATION SYSTEM & IS DESCRIBED AS WHAT TYPE OF ACCOUNT? AN ACCOUNT IS A SOURCE DOCUMENT
34. THE RIGHT SIDE OF AN ACCOUNT IS? THE CREDIT SIDE
35. AN ACCOUNT CONSISTS OF A TITLE, A DEBIT SIDE, & A CREDIT SIDE
36. A T-ACCOUNT IS A WAY OF DEPICTING THE BASIC FORM OF AN ACCOUNT.
37. A DEBIT TO AN ASSET ACCOUNT INDICATES AN INCREASE IN THE ASSET
38. THE NORMAL BALANCE OF ANY ACCOUNT IS THE SIDE WHICH INCREASES THAT ACCOUNT
39. THE DOUBLE-ENTRY SYSTEMS REQUIRES THAT EACH TRANSACTION MUST BE RECORDED IN... IN AT LEAST TWO DIFFERENT ACCOUNTS
40. WHAT IS THE EXPANDED BASIC ACCOUNTING EQUATION? ASSET + DIVIDENDS + EXPENSES = LIABILITIES + COMMON STOCK + REVENUE
41. IDENTIFY THE NORMAL BALANCE OF ACCOUNTING. ASSETS -->DEBITS LIABILITIES --> CREDIT COMMON STOCK --> CREDIT REVENUES --> CREDIT EXPENSES --> DEBIT
42. THE BEST INTERPRETATION OF THE WORD CREDIT IS THE RIGHT SIDE OF AN ACCOUNT
43. IN RECORDING AN ACCOUNTING TRANSACTION IN A DOUBLE-ENTRY SYSTEM THE AMOUNT... OF THE DEBITS MUST EQUAL THE AMOUNT OF THE CREDITS
44. AN ACCOUNTING CONVENTION IS BEST DESCRIBED AS AN ACCOUNTING CUSTOM
45. AN ACCOUNTANT HAS DEBITED AN ASSET ACCT FOR $1000 & CREDITED A LIABILITY ACCT FOR $500. WHAT CAN BE DONE TO COMPLETE THE RECORDING CREDIT A DIFFERENT ASSET ACCOUNT FOR $500
46. AN ACCOUNTANT HAS DEBITED AN ASSET ACCT FOR $1000 & CREDITED A LIABILITY ACCT FOR $500. WHAT WOULD BE AN INCORRECT WAY OF RECORDING TRANSACTION? DEBIT A STOCKHOLDERS' EQUITY ACCOUNT FOR $500
47. CAN DEBIT & CREDIT BE INTERPRETED TO MEAN INCREASE & DECREASE? (true or false) FALSE
48. AN ACCOUNT WILL HAVE A CREDIT BALANCE IF THE CREDITS EXCEED THE DEBITS
49. FOR THE BASIC ACCOUNTING EQUATION TO STAY IN BALANCE, EACH TRANSACTION RECORDED MUST AFFECT TWO OR MORE ACCOUNTS
50. CREDITS DECREASE ASSETS & INCREASE LIABILITIES (true and false) TRUE
51. ASSETS NORMALLY SHOW DEBIT BALANCES
52. AN AWARENESS OF THE NORMAL BALANCES OF ACCOUNTS WOULD HELP YOU SPOT WHICH ERROR IN RECORDINGS. A CREDIT BALANCE IN AN EXPENSE ACCOUNT
53. IF A COMPANY HAS OVERDRAWN ITS BANK BALANCE, THEN ITS CASH ACCOUNT WILL SHOW A CREDIT BALANCE
54. WHAT ACCOUNT IS NOT A STOCKHOLDERS' EQUITY? LIABILITIES
55. WHEN A CORPORATION DISTRIBUTES A DIVIDEND... IT DOESN'T HAVE TO BE CASH, IT COULD BE ANOTHER ASSET
56. EXPLAIN HOW DIVIDENEDS INCREASES OR DECREASES WITH DEBIT & CREDIT INCREASED WITH DEBITS AND DECREASED WITH CREDITS.
57. EXPENSES INCREASES STOCKHOLDERS' EQUTY (true or false) FALSE
58. A CREDIT TO A LIABILITY ACCOUNT INDICATES AN INCREASE IN THE AMOUNT OWED TO CREDITORS
59. 1ST MONTH OF OPERATIONS, TOTAL DEBIT ENTRIES TO CASH ACCT AMOUNT TO $800 TOTAL CREDIT ENTRIES TO CASH AMOUNT TO$600. CASH ACCT HAS A... $200 DEBIT BALANCE
60. THE USUAL SEQUENCE OF STEPS IN THE TRANSACTION RECORDING PROCESS IS. ANALYZE --> JOURNAL --> LEDGER
61. IN RECORDING BUSINESS TRANSACTIONS, EVIDENCE THAT AN ACCOUNTING TRANSACTION HAS TAKEN PLACE IS OBTAINED FROM BUSINESS DOCUMENTS
62. AFTER A BUSINESS TRANSACTIONS HAS BEEN ANALYZED & ENTERED IN THE BOOK OF ORIGINAL ENTRY, THE NEXT STEP IN RECORDING PROCESS IS... LEDGER ACCOUNTS
63. THE FIRST STEP IN THE RECORDING PROCESS IS TO ANALYZE THE TRANSACTION IN TERMS OF ITS EFFECT ON THE ACCOUNT
64. EVIDENCE THAT WOULD NOT HELP WITH DETERMING THE EFFECTS OF A TRANSACTION ON THE ACCOUNT WOULD BE... AN ADVERTISING BROCHURE
65. AFTER TRANSACTION INFORMATION HAS BEEN RECORDED IN THE JOURNAL, IT IS TRANSFERRED TO THE LEDGER
66. THE USUAL SEQUENCE OF STEPS IN THE RECORDING PROCESS IS TO ANALYZE EACH TRANSACTION, ENTER THE TRANSACTION IN THE JOURNAL, & TRANSFER THE INFORMATION TO THE LEDGER ACCOUNTS.
67. THE FINAL STEP IN THE RECORDING PROCESS IS TO TRANSFER THE JOURNAL INFORMATION TO THE LEDGER
68. THE RECORDING PROCESS OCCURS REPEATEDLY DURING THE ACCOUNTING PERIOD
69. A JOURNAL PROVIDES A CHRONOLOGICAL RECORD OF TRANSACTIONS
70. WHEN THREE OR MORE ACCOUNTS ARE REQUIRED IN ONE JOURNAL ENTRY, THE ENTRY IS REFERRED TO AS A COMPOUND ENTRY
71. WHEN TWO ACCOUNTS ARE REQUIRED IN ONE JOURNAL ENTRY, THE ENTRY IS REFERRED TO AS A SIMPLE ENTRY
72. ANOTHER NAME FOR JOURNAL IS BOOK OF ORIGINAL ENTRY
73. THE STANDARD FORMAT OF A JOURNAL WOULD NOT INCLUDE A T-ACCOUNT
74. TRANSACTIONS IN A JOURNAL ARE INITIALLY RECORDED IN CHRONOLOGICAL ORDER
75. A JOURNAL IS NOT USEFUL FOR PREPARING FINANCIAL STATEMENTS
76. A COMPLETE JOURNAL ENTRY DOES NOT SHOW THE NEW BALANCE IN THE ACCOUNTS AFFECTED BY THE TRANSACTION
77. THE NAME GIVEN TO ENTERING TRANSACTION DATA IN THE JOURNAL IS JOURNALIZING
78. THE STANDARD FORM OF A JOURNAL ENTRY HAS THE DEBIT ACCOUNT ENTERED FIRST AT THE EXTREME LEFT MARGIN
79. WHEN JOURNALIZING, THE REFERENCE COLUMN IS LEFT BLANK
80. ON 03/01/03 DONNA BUYS A COPIER FOR HER BUSINESS & FINANCES THIS PURCHASE ON CASH & A NOTE. HOW DO YOU JOURNALIZE MAKE A COMPOUND ENTRY
81. A RECORD OF INCREASES & DECREASES IN SPECIFIC ASSET, LIABILITY, & STOCKHOLDERS' EQUITY ITEMS IS CALLED A GENERAL LEDGER
82. THE USUAL ORDERING OF ACCOUNTS IN THE GENERAL LEDGER IS ASSETS, LIABILITIES, STOCKHOLDERS' EQUITY, REVENUES, AND EXPENSES
83. MANAGEMENT COULD DETERMINE THE AMOUNTS DUE FROM CUSTOMERS BY EXAMING WHICH LEDGER ACCOUNT? ACCOUNTS RECEIVABLE
84. THE LEDGER ACCOUNTS SHOULD BE ARRANGED IN STATEMENT ORDER
85. A THREE COLUMN FORM OF ACCOUNT IS SO NAMED BECAUSE IT HAS COLUMNS FOR DEBIT, CREDIT AND BALANCE
86. THE PROCEDURE OF TRANSFERRING JOURNAL ENTRIES TO THE LEDGER ACCOUNTS IS CALLED POSTING
87. A NUMBER IN THE REFERENCE COLUMN IN A GENERAL JOURNAL INDICATES THAT THE ENTRY HAS BEEN POSTED TO A PARTICULAR ACCOUNT
88. A CHART OF ACCOUNT FOR A BUSINESS FIRM LIST WHAT ACCOUNTS? LISTS ACCOUNTS & ACCOUNT NUMBERS THAT IDENTIFY THEIR LOCATION IN THE LEDGER
89. POSTING ACCUMULATES THE EFFECTS OF JOURNALIZED TRANSACTIONS IN THE INDIVIDUAL ACCOUNTS
90. AFTER JOURNAL ENTRIES ARE POSTED, THE REFERENCE COLUMN WILL SHOW... OF THE GENERAL LEDGER WILL SHOW JOURNAL PAGE NUMBERS
91. THE EXPLANATION COLUMN OF THE GENERAL LEDGER IS USED INFREQUENTLY
92. A NUMBERING SYSTEM FOR A CHART OF ACCOUNTS USUALLY STARTS WITH BALANCE SHEET ACCOUNTS
93. THE FIRST STEP IN DESIGNING A COMPUTERIZED ACCOUNTING SYSTEM IS THE CREATION OF THE CHART OF ACCOUNTS
94. A LIST OF ACCOUNTS & THEIR BALANCES AT A GIVEN TIME IS CALLED A TRIAL BALANCE
95. IF THE SUM OF THE DEBIT COLUMN EQUALS THE SUM OF THE CREID COLUMN IN A TRIAL BALANCE, IT INDICATES THE MATHEMATICAL EQUALITY OF THE ACCOUNTING EQUATION
96. A TRIAL BALANCE IS A LISTING OF GENERAL LEDGER ACCOUNTS & BALANCES
97. CUSTOMARILY, A TRIAL BALANCE IS PREPARED AT THE END OF AN ACCOUNTING PERIOD
98. A TRIAL BALANCE WOULD ONLY HELP IN DETECTING WHAT ERRORS? A TRANSPOSITION ERROR WHEN TRANSFERRING THE DEBIT SIDE OF JOURNAL ENTRY TO THE LEDGER.
99. THE WORK SHEET IS A TYPE OF WORKING PAPER
100. IN PREPARING CLOSING ENTRIES, WHAT COLUMN OF THE WORKSHEET IS MOST HELPFUL THE INCOME STATEMENT COLUMNS
101. THE PROPER SEQUENCE FOR THE ACCOUNT CYCLE IS ANALYZE, JOURNALIZE, POST, ADJUST, PREPARE STATEMENTS, CLOSE.
102. AFTER ALL THE CLOSING ENTRIES HAVE BEEN POSTED, THE BALANCE OF THE INCOME SUMMARY ACCOUNT WILL BE ZERO
103. THE POST-CLOSING TRIAL BALANCE WILL CONTAIN ONLY BALANCE SHEET ACCOUNTS
104. AN IMPORTANT PURPOSE OF CLOSING ENTRIES IS TO SET PERMANENT ACCOUNT BALANCES TO ZERO IN ORDER TO BEGIN THE NEXT PERIOD (T/F) FALSE
105. THE PREPARATION OF REVERSING ENTRIES IS A REQUIRED STEP IN THE ACCOUNTING CYCLE (T/F) FALSE
106. A WORK SHEET CAN BE USED AS A BASIS FOR POSTING THE ADJUSTMENTS TO THE LEDGER (T/F) FALSE
107. THE CONTENTS OF THE OWNER'S EQUITY SECTION OF A PROPRIETORSHIP IS THE SAME AS THE CONTENT OF THE OWNER'S EQUITY SECTION OF A CORPORATION FALSE
108. ADJ. ARE JOURNALIZED & POSTED ONLY AT THE ENDING PERIOD, WHEREAS CORRECTING ENTRIES ARE JOURNALIZED & POSTED WHENEVER AN ERROR IS DISCOVERED (T/F) TRUE
109. CURRENT ASSETS ARE RESOURCES THAT CAN BE REALIZED IN CASH, BUT ARE NOT EXPECTED TO BE CONVERTED INTO CASH WITHIN 1 YR OF THE OPERATING CYCLE, WHICHEVER IS LONGER. (T/F) FALSE
110. LONG-TERM LIABILITES SUCH AS BANK NOTES PAYABLE, MORTGAGES PAYABLE, & BONDS PAYABLE ARE EXPECTED TO BE PAID FROM EXISTING CURRENT ASSETS. (T/F) FALSE
111. THE BALANCE OF ACCUMULATED DEPRECIATION WIL APPEAR IN THE CREDIT SIDE OF THE WORK SHEET'S BALANCE SHEET COLUMN (T/F) TRUE
112. THE RELATIONSHIP BETWEEN CURRENT ASSETS & CURRENT LIABILITIES IS IMPORTANT IN EVALUATING A COMPANY'S LIQUIDITY. TRUE
113. INTANGIBLE ASSETS ARE NOT LISTED ON THE BALANCE SHEET BECAUSE THEY DO NOT HAVE PHYSICAL SUBSTANCE FALSE