Financial And Managerial Accounting 15th Edition By jan Williams -Test Bank

3. The running balance form or the T account form is typically used in the trial balance to display the accounts and their amounts. True False 4. Dividends are an expense of a corporation and reduce both total assets and liabilities. True False 5. Dividends increase owners’ equity and therefore should be added to retained earnings. True False 6. Every business transaction is recorded by a debit to a balance sheet account and a credit to an income statement account. True False 7. Earning revenue increases owners’ equity and expenses reduce owners’ equity, therefore, revenues are recorded with debit entries and expenses are recorded with credit entries. True False 8. A trial balance cannot be distributed to stockholders in lieu of a balance sheet. True False 9. Accounts are usually arranged in the ledger in financial statement order, that is, assets first, followed by liabilities, owners’ equity, expenses, and revenues. True False 10. A credit to a ledger account refers to the entry of an amount on the right side of an account. True False 11. The left-hand side of an account is used for recording debits and the right-hand side for recording credits. True False 12. If the number of debit entries in an account is greater than the number of credit entries, the account will have a debit balance. True False 13. Liability accounts should only be debited and never credited. True False 14. Increases in owners’ equity are recorded by credits; increases in assets and in liabilities are recorded by debits. True False 15. When making a general journal entry, there can only be one debit and one credit. True False 16. A business that is profitable and liquid will have more accounts with credit balances than with debit balances. True False 17. Every transaction affects equal numbers of ledger accounts and is recorded by equal dollar amounts of debits and credits. True False 18. When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits recorded, but the number of debit and credit entries may differ. True False 19. If ledger accounts are maintained in three-column, running balance form, the journal should be maintained in the same format. True False 20. The general ledger is sometimes called the book of original entry because it is the accounting record where transactions are first recorded. True False 21. Each business transaction is initially recorded in a journal and later transferred to the appropriate accounts in the general ledger. True False 22. The matching principle refers to the relationship between revenues and expenses. True False 23. An increase in a liability is recorded by a credit; an increase in owners’ equity by a debit. True False 24. Revenues increase owners’ equity and are, therefore, recorded by crediting the revenues account. True False 25. The accrual basis of accounting recognizes expenses only when they are paid. True False 26. Every transaction which affects an income statement account also affects a balance sheet account. True False 27. A trial balance that balances provides proof that all transactions were correctly journalized and posted to the ledger. True False 28. A trial balance proves that equal amounts of debits and credits were posted to the ledger. True False 29. Dividends are an expense to a corporation and appear on the income statement. True False 30. A CEO or CFO associated with fraudulent financial reporting could be fined but not imprisoned under the Sarbanes Oxley Act. True False 31. “I was just following orders” is an acceptable defense if you committed an unethical action during an audit. True False Multiple Choice Questions 32. Sally Smith had expenses of $800 in June which sh