,DOWNLOADTHETestBankforFinancialAccountingInformationfor
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
Chapter
02 Financial Statements and the Accounting
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v System
True / False Questions
v v v
1. The first step to get from transactions and events to financial
v v v v v v v v v v
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
v v v v v v v v v
basis for accountingentries.
v v v
True False
4. Items such as sales tickets, bank statements, checks, and purchase orders are
v v v v v v v v v v v
examples of abusiness's source documents.
v v v v v
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.
v v v v
True False
2-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
,DOWNLOADTHETestBankforFinancialAccountingInformationfor
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
6. A customer's promise to pay on credit is classified as an account payable by the seller.
v v v v v v v v v v v v v v v
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.
v v v v v v v v v v v v v v
True False
9. Unearned revenues are classified as liabilities.
v v v v v
True False
10. Cash paid to stockholders by the business of a corporation and used for personal
v v v v v v v v v v v v v
expenses, shouldbe treated as an expense of the business.
v v v v v v v v v
True False
11. When a company provides services for which cash will not be received until some
v v v v v v v v v v v v v
v future date, thecompany should record the amount charged as accounts
v v v v v v v v v
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.
v v v v v
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.
v v v v v v v
True False
2-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
, DOWNLOADTHETestBankforFinancialAccountingInformationfor
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
14. The right side of an account is called the debit side.
v v v v v v v v v v
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.
v v v v v
True False
16. Increases in liability accounts are recorded as debits.
v v v v v v v
True False
17. Debits increase asset and expense accounts.
v v v v v
True False
18. Credits always increase account balances.
v v v v
True False
19. Crediting an expense account decreases it.
v v v v v
True False
20. A revenue account normally has a debit balance.
v v v v v v v
True False
21. Asset accounts are normally decreased by debits.
v v v v v v
True False
22. Debit means increase and credit means decrease for all accounts.
v v v v v v v v v
True False
2-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
Chapter
02 Financial Statements and the Accounting
v v v v v v
v System
True / False Questions
v v v
1. The first step to get from transactions and events to financial
v v v v v v v v v v
v statements isto identify eachtransaction from source documents.
v v v v v v v
True False
2. Preparation of a trial balance is the first step in processing a financial transaction.
v v v v v v v v v v v v v
True False
3. Source documents identify and describe business transactions and are the
v v v v v v v v v
basis for accountingentries.
v v v
True False
4. Items such as sales tickets, bank statements, checks, and purchase orders are
v v v v v v v v v v v
examples of abusiness's source documents.
v v v v v
True False
5. An account is a record of increases and decreases in a specific asset, liability,
v v v v v v v v v v v v v
equity, revenue, orexpense item.
v v v v
True False
2-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
,DOWNLOADTHETestBankforFinancialAccountingInformationfor
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
6. A customer's promise to pay on credit is classified as an account payable by the seller.
v v v v v v v v v v v v v v v
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.
v v v v v v v v v v v v v v
True False
9. Unearned revenues are classified as liabilities.
v v v v v
True False
10. Cash paid to stockholders by the business of a corporation and used for personal
v v v v v v v v v v v v v
expenses, shouldbe treated as an expense of the business.
v v v v v v v v v
True False
11. When a company provides services for which cash will not be received until some
v v v v v v v v v v v v v
v future date, thecompany should record the amount charged as accounts
v v v v v v v v v
v receivable.
True False
12. A company's chart of accounts is a list of all the accounts used and includes an
v v v v v v v v v v v v v v v
identification numberassigned to each account.
v v v v v
True False
13. An account's balance is the difference between the total debits and total
v v v v v v v v v v v
credits for the account,including any beginning balance.
v v v v v v v
True False
2-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
, DOWNLOADTHETestBankforFinancialAccountingInformationfor
v v v v v v v v
Decisions8thEditionJohnWild v v v v v
14. The right side of an account is called the debit side.
v v v v v v v v v v
True False
15. In a double-entry accounting system, the total dollar amount debited must always
v v v v v v v v v v v
equal the totaldollar amount credited.
v v v v v
True False
16. Increases in liability accounts are recorded as debits.
v v v v v v v
True False
17. Debits increase asset and expense accounts.
v v v v v
True False
18. Credits always increase account balances.
v v v v
True False
19. Crediting an expense account decreases it.
v v v v v
True False
20. A revenue account normally has a debit balance.
v v v v v v v
True False
21. Asset accounts are normally decreased by debits.
v v v v v v
True False
22. Debit means increase and credit means decrease for all accounts.
v v v v v v v v v
True False
2-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without
v v v v v v v v v v v vv v vv
the prior nwritten nconsent nof v vv v v v v
McGraw-Hill Education. v
