Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield

CHAPTER 0 ACCOUNTING CYCLE REVIEW Learning Objective Total # of questions from 1 34 2 133 3 30 4 16 5 185 6 8 7 5 8 20 9 12 TRUE-FALSE—Conceptual 1. Economic events that require recording in the financial statements are called accounting transactions. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 2. Revenue increases stockholders’ equity and should be recorded whenever cash is received from customers. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 3. Collection on an account receivable will increase both cash and accounts receivable. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 4. The payment of a liability decreases both cash and accounts payable. Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 0- Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 2 5. If total assets are increased, there must be a corresponding increase in liabilities or a decrease in stockholders’ equity. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 6. A new account is opened for each transaction entered into by a business firm. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 7. The recording process becomes more efficient and informative if all transactions are recorded in one account. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 8. An account consists of two parts: (1) a left or debit side and (2) a right or credit side. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 9. For a T account, an account balance is the difference in total dollars between total debit amounts and total credit amounts. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 10. An account is often referred to as a T-account because of the way it is constructed. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 11. A debit to an account always indicates an increase in that account. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 12. If a revenue account is credited, the revenue account is increased. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 13. The normal balance of all accounts is a debit. 0- Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry W