Test Bank for Fundamental Accounting Principles Volume 1 Canadian 15th Edition by Larson IBSN 1259087271

lOMoAR cPSD| 45278777




Test bank for fundamental accounting
principles volume 1 canadian 15th edition by
larson ibsn 1259087271
Fundamental accounting principles
(Sundance College)

, lOMoAR cPSD| 45278777




Test Bank for Fundamental Accounting Principles Volume 1
Canadian 15th Edition by Larson IBSN 1259087271

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

1) The first step in the accounting cycle is transaction analysis.
Answer: True False

2) An account is a detailed record of increases and decreases in a specific asset, liability or equity item.
Answer: True False

3) A ledger is a type of account.
Answer: True False

4) Goods sold on credit to customers are called accounts payable.
Answer: True False

5) As prepaid assets are used up, the costs of the assets become expenses.
Answer: True False

6) Withdrawals are a type of transaction that affects equity.
Answer: True False

7) A building is an example of an asset that does not provide any benefit to its owner.
Answer: True False

8) To make it easier for the bookkeeper, the cost of land is separated from the cost of buildings located
on the land.
Answer: True False

9) Unearned revenues are assets, because a service or product is owed to the customer.
Answer: True False

10) Cash withdrawn by the owner of an unincorporated business in the form of a monthly salary should
be treated as an expense of the business.
Answer: True False

11) When a company sells services for which cash will not be received until some future date, the
company should credit an unearned revenues account for the amount charged to the customer.
Answer: True False

12) A T-Account is a formal account frequently used in business.
Answer: True False

13) An account balance is the difference between the increases and decreases recorded in an account.
Answer: True False

14) The left side of a T-account is always the credit side, while the right side is always the debit side.
Answer: True False

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15) The accounting equation is expressed as assets = liabilities - equity.
Answer: True False

16) The accounting equation can be expressed as liabilities = assets - equity.
Answer: True False

17) In a double-entry accounting system, total debits must always equal total credits.
Answer: True False

18) Double-entry accounting means that every transaction affects and is recorded in at least two
accounts.
Answer: True False

19) Debits increase asset and expense accounts.
Answer: True False

20) Credits to accounts are always increases.
Answer: True False

21) To credit an expense account means to decrease it.
Answer: True False

22) Increases in liabilities are recorded as debits.
Answer: True False

23) All increases and decreases in cash are not necessarily recorded in the Cash account.
Answer: True False

24) A revenue account normally has a debit balance.
Answer: True False

25) Debits to accounts are normally decreases.
Answer: True False

26) Because they decrease equity, withdrawals made by a business owner are credited to his/her
withdrawals account.
Answer: True False

27) Asset accounts normally have credit balances and expense accounts normally have debit balances.
Answer: True False

28) The normal balance of an account refers to the debit or credit side where increases are recorded.
Answer: True False

29) The chart of accounts is a list of all the accounts used by a company.
Answer: True False


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30) A chart of accounts lists the accounts and balances at a specific time.
Answer: True False

31) Purchasing supplies on credit increases assets while decreasing liabilities.
Answer: True False

32) Prepaid Insurance is an expense account which is used for recording expenses that have been paid in
advance.
Answer: True False

33) A credit purchase of a business expense item should be recorded with a debit to an expense account
and a credit to Accounts Payable.
Answer: True False

34) If a company purchases land, paying part with cash and issuing a note payable for the balance, the
journal entry to record this transaction will include a debit to Cash.
Answer: True False

35) If a company sells products and receives from the customer a formal written promise to pay a
definite sum of money on demand or on a defined future date (or dates), the seller should debit the
promised amount to Accounts Receivable.
Answer: True False

36) A transaction that decreases an asset account and increases a liability account must also affect
another account.
Answer: True False

37) When a business sends a bill for $200 to a customer for services rendered, the journal entry to
record this transaction will include a $200 credit to Accounts Receivable.
Answer: True False

38) A transaction that increases an asset account and decreases a liability account must also affect
another account.
Answer: True False

39) Step Two of the accounting cycle requires that we record transactions in a record called a journal.
Answer: True False

40) A compound journal entry usually affects three or more accounts.
Answer: True False

41) A general journal entry usually includes information about the date of a transaction, titles of affected
accounts, dollar amount of each debit and credit and an explanation of the transaction.
Answer: True False




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