Chapter002AnalyzingandRecordingTransactionsTrue/FalseQuestions1.Accountingrecordsarealsoreferredtoasthebooks.TRUE3.Preparationofatrialbalanceisthefirststepintheanalyzingandrecordingprocess.FALSE4.Sourcedocumentsprovideevidenceofbusinesstransactionsandarethebasisforaccountingentries.TRUE5.Itemssuchassalestickets,bankstatements,checks,andpurchaseordersaresourcedocuments.TRUE6.Anaccountisarecordofincreasesanddecreasesinaspecificasset,liability,equity,revenue,orexpenseitem.TRUE7.Acustomer'spromisetopayiscalledanaccountpayabletotheseller.FALSE9.Asprepaidexpensesareused,theexpiredcostsoftheassetsbecomeexpenses.TRUE10.Landandbuildingsaregenerallyrecordedinthesameledgeraccount.FALSe13.Cashwithdrawnbytheownerofaproprietorshipshouldbetreatedasanexpenseofthebusiness.FALSE15.Thechartofaccountsisalistofalltheaccountsusedbyacompanyandincludesanidentificationnumberassignedtoeachaccount.TRUE16.Anaccountbalanceisthedifferencebetweenthedebitsandcreditsforanaccountincludinganybeginningbalance.TRUE18.Inadouble-entryaccountingsystem,thetotalamountdebitedmustalwaysequalthetotalamountcredited.TRUE19.Increasesinliabilityaccountsarerecordedasdebits.FALSE20.Debitsincreaseassetandexpenseaccounts.TRUE21.Creditsalwaysincreaseaccountbalances.FALS23.Doubleentryaccountingrequiresthateachtransactionaffect,andberecordedin,atleasttwoaccounts.TRUE24.Arevenueaccountnormallyhasadebitbalance.FALSE25.Accountsarenormallydecreasedbydebits.FALSE26.Theowner'swithdrawalaccountnormallyhasacreditbalancesinceitisanequityaccount.FALSE28.Anowner'scapitalaccountnormallyhasadebitbalance.FALSE29.Adebitentryisalwaysfavorable.FALSE30.Atransactionthatdecreasesanassetaccountandincreasesaliabilityaccountmustalsoaffectoneormoreotheraccounts.TRUE31.Atransactionthatincreasesanassetanddecreasesaliabilitymustalsoaffectoneormoreotheraccounts.TRUE34.Ifacompanypurchaseslandpayingcash,thejournalentrytorecordthistransactionwillincludeadebittoCash.FALSE2-1Chapter002AnalyzingandRecordingTransactionsIfacompanyprovidesservicestoacustomeroncreditthesellingcompanyshouldcreditAccountsReceivable.FALSEWhenacompanybillsacustomerfor$600forservicesrendered,thejournalentrytorecordthistransactionwillincludea$600debittoServicesRevenue.FALSE37.Thedebtratiohelpstoassesstheriskacompanyhasoffailingtopayitsdebtsandishelpfultobothitsownersandcreditors.TRUE38.38.Thehigheracompany'sdebtratiois,thehighertheriskofacompanynotbeingabletomeetitsobligations.TRUEThedebtratioiscalculatedbydividingtotalassetsbytotalliabilities.FALSE40.Acompanythatfinancesarelativelylargeportionofitsassetswithliabilitiesissaidtohaveahighdegreeoffinancialleverage.TRUE41.Ifacompanyishighlyleveraged,thismeansthatithasrelativelylowriskofnotbeingabletorepayitsdebt.FALSE42.HamiltonIndustrieshasliabilitiesof$105millionandtotalassetsof$350million.Itsdebtratiois40.0%.FALSE$105million/$350million=30.0%43.Highfinancialleverageisalwaysbadforacompany'sowners.FALSE44.Acompoundjournalentryaffectsnomorethantwoaccounts.FALSE45.Postingisthetransferofjournalentryinformationtotheledger.TRUE46.Transactionsarefirstrecordedintheledger.FALSE47.Thejournalisknownasabookoforiginalentry.TRUE48.Ajournalgivesacompleterecordofeachtransactioninoneplace,andshowsthedebitsandcreditsforeachtransaction.TRUEAICPAFN:DecisionMakingDifficulty:EasyLearningObjective:C12-2Chapter002AnalyzingandRecordingTransactions49.Thejournali...
