Test Bank For Financial Accounting For MBAs ( 8th Edition) By Easton And John Wild||LATEST UPDATE 2024/2025

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Chapter


02 Financial Statements and the Accounting
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v System



True / False Questions
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1. The first step to get from transactions and events to financial
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v statements isto identify eachtransaction from source documents.
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True False


2. Preparation of a trial balance is the first step in processing a financial transaction.
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True False


3. Source documents identify and describe business transactions and are the
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basis for accountingentries.
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True False


4. Items such as sales tickets, bank statements, checks, and purchase orders are
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examples of abusiness's source documents.
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True False


5. An account is a record of increases and decreases in a specific asset, liability,
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equity, revenue, orexpense item.
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True False




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6. A customer's promise to pay on credit is classified as an account payable by the seller.
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True False


7. Dividends paid to the stockholders v v v v v are a business expense. v v v




True False


8. The purchase of land and buildings will generally be recorded in the same ledger account.
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True False


9. Unearned revenues are classified as liabilities.
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True False


10. Cash paid to stockholders by the business of a corporation and used for personal
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expenses, shouldbe treated as an expense of the business.
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True False


11. When a company provides services for which cash will not be received until some
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v future date, thecompany should record the amount charged as accounts
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v receivable.


True False


12. A company's chart of accounts is a list of all the accounts used and includes an
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identification numberassigned to each account.
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True False


13. An account's balance is the difference between the total debits and total
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credits for the account,including any beginning balance.
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True False




2-2
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the prior nwritten nconsent nof v vv v v v v



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14. The right side of an account is called the debit side.
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True False


15. In a double-entry accounting system, the total dollar amount debited must always
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equal the totaldollar amount credited.
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True False


16. Increases in liability accounts are recorded as debits.
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True False


17. Debits increase asset and expense accounts.
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True False


18. Credits always increase account balances.
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True False


19. Crediting an expense account decreases it.
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True False


20. A revenue account normally has a debit balance.
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True False


21. Asset accounts are normally decreased by debits.
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True False


22. Debit means increase and credit means decrease for all accounts.
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True False




2-3
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the prior nwritten nconsent nof v vv v v v v



McGraw-Hill Education. v