1.
Unearned income is a liability.
A) True
B) False
2.
Prepaid expenses are assets.
A) True
B) False
3.
A business with no cash is insolvent.
A) True
B) False
4.
Assets must always equal liabilities plus capital.
A) True
B) False
5.
Assets normally have credit balances.
A) True
B) False
6.
Balance sheets report profitability.
A) True
B) False
7.
All payables are liabilites.
A) True
B) False
8.
FOB destination means buyer pays freight.
A) True
B) False
9.
Accrued revenue, by defintion, is unearned.
A) True
B) False
10.
Inventory is a current asset.
A) True
B) False
11.
Debits reduce liabilites.
A) True
B) False
12.
Sales returns are debited to inventory at cost.
A) True
B) False
13.
Sales minus sales returns, allowances, and discounts equals costof sales.
A) True
B) False
14.
Withdrawals reduce net income.
A) True
B) False
15.
A business with more debt than equity is insolvent.
A) True
B) False
16.
A business with more equity than debt is profitable.
A) True
B) False
17.
Net losses reduce capital.
A) True
B) False
18.
FIFO leaves the most recent costs in inventory.
A) True
B) False
19.
When creditors are paid, cash is always credited.
A) True
B) False
20.
There are two types of journal entires, simple and complex.
A) True
B) False
21.
Trade discounts reduce transportation costs.
A) True
B) False
22.
Cash discounts taken are credited to inventory.
A) True
B) False
23.
Cash discounts given are subtracted from sales.
A) True
B) False
24.
Recording unearned income requires a credit to cash.
A) True
B) False
25.
Journal entries must always contain both debits and credits.
A) True
B) False
26.
All adjusting entries always contain both income statement andbalance sheet accounts.
A) True
B) False
27.
Equity and capital are the same.
A) True
B) False
28.
Balance sheet accounts are either assets or liabilites.
A) True
B) False
29.
Debits reduce assets.
A) True
B) False
30.
when recording income, a revenue account must always becredited.
A) True
B) False
31.
All expense accounts, even prepaid expenses, normally have debitbalances.
A) True
B) False
32.
Accounts payable would be debited to record an expense owed.
A) True
B) False
33.
A seller would record freight costs paid FOB shipping as acredit.
A) True
B) False
34.
When receivables are collected, cash is always debited.
A) True
B) False
35.
When buyers return inventory, sellers credit cost of sales.
A) True
B) False
36.
Copyrights are amortized.
A) True
B) False
37.
Inventory is depleted.
A) True
B) False
38.
Land depreciates.
A) True
B) False
39.
A petty cash shortage would be recorded as a debit to cash shortand over.
A) True
B) False
40.
When notes are collected, cash is debited for their maturityvalue.
A) True
B) False
41.
When reconciling cash, deposits in transit are added to thedepositor's book balance.
A) True
B) False
42.
Trade discounts are recorded on worksheets.
A) True
B) False
43.
Accuumlated depreciation is a contra-asset.
A) True
B) False
44.
Depreciation is an expense that reflects the cost ofuncollectible receivables.
A) True
B) False
45.
Revenue would appear on a post closing trial balance as acredit.
A) True
B) False
46.
Income summary is closed to capital.
A) True
B) False
47.
Adjustments are recorded on worksheets.
A) True
B) False
48.
Journalizing follows posting.
A) True
B) False
49.
All general ledger accounts are adjusted and closed at the endof the accounting cycle.
A) True
B) False
50.
Supplies are assets.
A) True
B) False
