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Canadian Volume 1 Kieso
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,Intermediate Accounting, 14Ce (Kieso)
Chapter 0 Accounting Cycle Review

1) Economic events that require recording in the financial statements are called accounting
transactions.
Answer: TRUE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

2) Revenue increases shareholders' equity and should be recorded whenever cash is received
from customers.
Answer: FALSE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

3) Collection on an account receivable will increase both cash and accounts receivable.
Answer: FALSE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

4) The payment of a liability decreases both cash and accounts payable.
Answer: TRUE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

5) If total assets are increased, there must be a corresponding increase in liabilities or a decrease
in shareholders' equity.
Answer: FALSE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic



1

,6) A new account is opened for each transaction entered into by a business firm.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

7) The recording process becomes more efficient and informative if all transactions are recorded
in one account.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

8) An account consists of two parts: (1) a left or debit side and (2) a right or credit side.
Answer: TRUE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

9) For a T account, an account balance is the difference in total dollars between total debit
amounts and total credit amounts.
Answer: TRUE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

10) An account is often referred to as a T-account because of the way it is constructed.
Answer: TRUE
Diff: 1
Learning Objective: Analyze business transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




2

,11) A debit to an account always indicates an increase in that account.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

12) If a revenue account is credited, the revenue account is increased.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

13) The normal balance of all accounts is a debit.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

14) Debit and credit can be interpreted to mean "bad" and "good," respectively.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

15) A credit means that an account has been increased.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

16) A decrease in a liability account is recorded by a debit.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

3

,17) An increase in an asset is recorded by a debit.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

18) The double-entry system of accounting refers to the placement of a double line at the end of
a column of figures.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

19) A credit balance in a liability account indicates that an error in recording has occurred.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

20) The normal balance of an asset is a credit.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

21) The normal balance of the dividend account is a credit.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




4

,22) Assets are decreased with a credit.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

23) A debit means that an account has been decreased.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

24) A decrease in a liability is recorded by a debit.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

25) An increase in an asset is recorded by a debit.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

26) Liabilities are increased with debits and decreased with credits.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




5

,27) The dividends account is a subdivision of the retained earnings account and appears as an
expense on the income statement.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

28) Revenues are a subdivision of shareholders' equity.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

29) Under the double-entry system, revenues must always equal expenses.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

30) Transactions are entered in the ledger first and then they are analyzed in terms of their effect
on the accounts.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

31) Source documents can provide evidence that a transaction has occurred.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




6

,32) Each transaction must be analyzed in terms of its effect on the accounts before it can be
recorded in a journal.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

33) Transactions are entered in the ledger accounts and then transferred to journals.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

34) All business transactions must be entered first in the general ledger.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

35) Transactions are recorded in alphabetical order in a journal.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

36) The journal is a chronological record of all transactions.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




7

, 37) A journal is an accounting record in which transactions are initially recorded.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

38) The complete effect of a transaction on the accounts is disclosed in the journal.
Answer: TRUE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

39) The account titles used in journalizing transactions need not be identical to the account titles
in the ledger.
Answer: FALSE
Diff: 1
Learning Objective: Journalize the transactions.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

40) The chart of accounts is a special ledger used in accounting systems.
Answer: FALSE
Diff: 1
Learning Objective: Post to the ledger accounts.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

41) A general ledger should be arranged in financial statement order beginning with the balance
sheet accounts.
Answer: TRUE
Diff: 1
Learning Objective: Post to the ledger accounts.
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic




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