Exam (elaborations) TEST BANK FOR Fundamental Accounting Principles by John Wild, Ken Shaw and Barbara Chiappetta 21st Edition

Exam (elaborations) TEST BANK FOR Fundamental Accounting Principles by John Wild, Ken Shaw and Barbara Chiappetta 21st Edition Accounting Principles - 21e, TEST BANK 3 Fundamental Accounting Principles by John Wild, Ken Shaw and Barbara Chiappetta- 21e, TEST BANK 3 ch2 Key 1. The first step in the processing of a transaction is to analyze the transaction and source documents. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #1 2. Preparation of a trial balance is the first step in the analyzing and recording process. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #2 3. Source documents provide evidence of business transactions and are the basis for accounting entries. TRUE AACSB: Communication AICPA BB: Industry click it ,it has the solutions manual and test bank contact me: AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #3 4. Items such as sales tickets, bank statements, checks, and purchase orders are source documents. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #4 5. An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #5 6. A customer's promise to pay is called an account payable to the seller. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #6 7. Withdrawals by the owner are a business expense. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #7 click it ,it has the solutions manual and test bank contact me: 8. Land and buildings are generally recorded in the same ledger account. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #8 9. Unearned revenues are liabilities. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #9 10. Cash withdrawn by the owner of a proprietorship should be treated as an expense of the business. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #10 11. When a company provides services for which cash will not be received until some future date, the company should record the amount charged as unearned revenue. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #11 click it ,it has the solutions manual and test bank contact me: 12. The chart of accounts is a list of all the accounts used by a company and includes an identification number assigned to each account. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C3 Describe a ledger and a chart of accounts. Topic: Ledger and Chart of Accounts Wild - Chapter 02 #12 13. An account balance is the difference between the debits and credits for an account including any beginning balance. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C2 Describe an account and its use in recording transactions. Topic: Accounts Wild - Chapter 02 #13 14. Debit means the right side of an account. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #14 15. In a double-entry accounting system, the total amount debited must always equal the total amount credited. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #15 click it ,it has the solutions manual and test bank contact me: 16. Increases in liability accounts are recorded as debits. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #16 17. Debits increase asset and expense accounts. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #17 18. Credits always increase account balances. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #18 19. Crediting an expense account decreases it. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #19 20. A revenue account normally has a debit balance. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making click it ,it has the solutions manual and test bank contact me: Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #20 21. Accounts are normally decreased by debits. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #21 22. The owner's withdrawal account normally has a credit balance since it is an equity account. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #22 23. Asset accounts normally have credit balances and revenue accounts normally have debit balances. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #23 24. An owner's capital account normally has a debit balance. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #24 click it ,it has the solutions manual and test bank contact me: 25. A debit entry is always favorable. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-C4 Define debits and credits and explain double-entry accounting. Topic: Debits and Credits Wild - Chapter 02 #25 26. A transaction that decreases an asset account and increases a liability account must also affect one or more other accounts. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #26 27. A transaction that increases an asset and decreases a liability must also affect one or more other accounts. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #27 28. If insurance coverage for the next three years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #28 click it ,it has the solutions manual and test bank contact me: 29. The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #29 30. If a company purchases land paying cash, the journal entry to record this transaction will include a debit to Cash. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #30 31. If a company provides services to a customer on credit the selling company should credit Accounts Receivable. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #31 32. When a company bills a customer for $600 for services rendered, the journal entry to record this transaction will include a $600 debit to Services Revenue. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #32 click it ,it has the solutions manual and test bank contact me: 33. The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #33 34. The higher a company's debt ratio is, the higher the risk of a company not being able to meet its obligations. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #34 35. The debt ratio is calculated by dividing total assets by total liabilities. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #35 36. A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #36 click it ,it has the solutions manual and test bank contact me: 37. If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #37 38. Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%. FALSE Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $105 million/$350 million = 30% AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-A2 Compute the debt ratio and describe its use in analyzing financial condition. Topic: Debt Ratio Wild - Chapter 02 #38 39. A compound journal entry affects no more than two accounts. FALSE AACSB: Reflective Thinking AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #39 40. Posting is the transfer of journal entry information to the ledger. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-P1 Record transactions in a journal and post entries to a ledger. Topic: Recording Transactions and Posting Entries Wild - Chapter 02 #40 click it ,it has the solutions manual and test bank contact me: 41. Transactions are first recorded in the ledger. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #41 42. The journal is known as a book of original entry. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #42 43. A journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #43 44. The journal is known as the book of final entry because financial statements are prepared from it. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Topic: Processing Transactions Wild - Chapter 02 #44 45. The trial balance is a list of all general ledger accounts and their balances at a point in time. TRUE AACSB: Communication AICPA BB: Industry click it ,it has the solutions manual and test bank contact me: AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-P2 Prepare and explain the use of a trial balance. Topic: Trial Balance Wild - Chapter 02 #45 46. Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then owner's capital and withdrawals, followed by revenues and expenses. TRUE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-P2 Prepare and explain the use of a trial balance. Topic: Trial Balance Wild - Chapter 02 #46 47. The trial balance can serve as a replacement for the balance sheet, since debits must equal with credits. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-P2 Prepare and explain the use of a trial balance. Topic: Trial Balance Wild - Chapter 02 #47 48. A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-P2 Prepare and explain the use of a trial balance. Topic: Trial Balance Wild - Chapter 02 #48 49. If cash was incorrectly debited for $100 instead of correctly credited for $100, the cash account is out of balance by $100. FALSE AACSB: Analytic AICPA BB: Industry AICPA FN: Decision Making Blooms: Apply Difficulty: 3 Hard click it ,it has the solutions manual and test bank contact me: Learning Objective: 02-A1 Analyze the impact of transactions on accounts and financial statements. Topic: Transaction Analysis Wild - Chapter 02 #49 50. The balance sheet provides a link between beginning and ending income statements. FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Decision Making Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-P3 Prepare financial statements from business transactions. Topic: Financial Statements Wild - Chapter 02 #50 51. The heading on each financial statement lists the three W's - Who (the name of the organization); What (the name of the statement); and Where (the organization's address) FALSE AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-P3 Prepare financial statements from business transactions. Topic: Financial Statements Wild - Chapter 02 #51 52. An income statement reports the revenues earned less expenses incurred by a business over a period of time. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-P3 Prepare financial statements from business transactions. Topic: Financial Statements Wild - Chapter 02 #52 53. The balance sheet reports the financial position of a company at a point in time. TRUE AACSB: Communication AICPA BB: Industry AICPA FN: Reporting Exam (elaborations) TEST BANK FOR Fundamental Accounting Principles by John Wild, Ken Shaw and Barbara Chiappetta 21st Edition Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-P3 Prepare financial statements from business transactions. Topic: Financial Statements Wild - Chapter 02 #53 click it ,it has the solutions manual and test bank