Test bank for financial accounting for mbas 7th edition easton

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Chapter


02 Financial Statements and the Accounting
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M System



True / False Questions
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1. The first step to get from transactions and events to
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M financial statements is to identify eachtransaction from source
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M documents.


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
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M basis for accountingentries.
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True False


4. Items such as sales tickets, bank statements, checks, and purchase orders are
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M examples of abusiness's source documents. M M M M




True False


5. An account is a record of increases and decreases in a specific asset, liability,
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M equity, revenue, orexpense item.M M M




True False



2-1
Copyright M © 2017 M M M McGraw-Hill M Education. All rights reserved. M M M M M M M No M M reproduction M M or M distribution
without M




v M the prior nwritten nconsent
v Mv M vM v v
M M




M of McGraw-HillEducation.
M

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Decisions8thEditionJohnWild


6. A customer'spromise to pay on credit is classified as an account payable by the seller.
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True False


7. Dividends paid to the stockholders M M M M M M M M M are a business expense. M M M M M




True False


8. The purchase of land and buildings will generally
M M M M M M M M M M M M M M M be recorded in the same ledger account.
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True False


9. Unearnedrevenues are classified as liabilities.
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True False


10. Cash paid to stockholders by the business of a corporation and used for personal
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M expenses, shouldbe treated as an expense of the business.
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True False


11. When a company provides services for which cash will not be received until some
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M future date, thecompany should record the amount charged as accounts
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M 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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M identification numberassigned to each account. M M M M




True False


13. An account's balance is the difference between the total debits and total
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M credits for the account,including any beginning balance.
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True False




2-2
Copyright M © 2017 M M M McGraw-Hill M Education. All rights reserved. M M M M M M M No M M reproduction M M or M distribution
without M




v M the prior nwritten nconsent
v Mv M vM v v
M M




M of McGraw-HillEducation.
M

, DOWNLOADTHETestBankforFinancialAccountingInformationfor
Decisions8thEditionJohnWild


14. The right side of an account is called the debit side.
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True False


15. In a double-entry accounting system, the total dollar amount debited must always
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M equal the totaldollar amount credited.
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True False


16. Increases in liability accounts are recorded as debits.
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True False


17. Debits increase asset and expense accounts.
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True False


18. Credits always increaseaccount balances.
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True False


19. Crediting an expense account decreases it.
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True False


20. A revenue
M M M account normally M M M M has a debit balance. M M M M M M




True False


21. Assetaccounts are normally decreased by debits.
M M M M M M M M M M




True False


22. Debit means increase andcredit means decrease for all accounts.
M M M M M M M M M




True False




2-3
Copyright M © 2017 M M M McGraw-Hill M Education. All rights reserved. M M M M M M M No M M reproduction M M or M distribution
without M




v M the prior nwritten nconsent
v Mv M vM v v
M M




M of McGraw-HillEducation.
M