Financial Accounting Test 1 Exam Questions And Answers 2024

Financial Accounting Test 1 Exam Questions And Answers 2024 A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities. -correct answer-T Liabilities represent an "inside" interest in a business. -correct answer-F The accounting equation shows the relationship among the three basic accounting elements--assets, revenues, and owner's equity. -correct answer-F If owner's equity and liabilities increased during the period, then assets must also have increased. -correct answer-T An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered. -correct answer-T If the revenue of a period exceeds the expenses, the excess represents a net loss. -correct answer-F Any accounting period of twelve months' duration is usually referred to as a calendar year. -correct answer-F Revenues received during an accounting period increase owner's equity. -correct answer-T Since supplies last for several months, they are recorded as assets. -correct answer-T Since insurance lasts for several months, it is recorded as owner's equity. -correct answer-F An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements. -correct answer-T A T account has three parts: the title, the debit side, and the credit side. -correct answer-T To debit an account is to enter an amount on the left side of the account. -correct answer-T Asset accounts normally have debit balances. -correct answer-T Revenue accounts normally have debit balances. -correct answer-F Prepaid is an expense account -correct answer-F At least 2 accounts are affected by every transaction -correct answer-T The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting. -correct answer-F The sum of the debits must equal the sum of the credits on the trial balance. -correct answer-T Prepaid insurance and supplies are assets because they will provide benefits for more than one month -correct answer-T The flow of data through the accounting information system includes analyzing transactions, journalizing, posting, and preparing a trial balance. -correct answer-T An account in the chart of accounts is assigned a number at random. -correct answer-F Source documents begin the process of entering transactions in the accounting system. -correct answer-T Source documents provide objective, verifiable evidence of business transactions. -correct answer-T Copies of sales tickets or sales invoices issued to customers or clients provide information about sales of goods or services. -correct answer-T Information about cash receipts can be obtained from check stubs and carbon copies of checks. -correct answer- The purpose of a journal is to provide a chronological record of all transactions completed by the business. -correct answer-T The chart of accounts includes the account titles in numerical order. -correct answer-T The Description column of a two-column journal is used to enter the titles of the accounts affected by each transaction, together with a description of the transaction. -correct answer-T A separate line in the two-column journal should be used for each account title. -correct answer-T The matching of assets and expenses of a business on a periodic basis is referred to as the matching concept. -correct answer-F