,TESTBANK for Intermediate Accounting 18e
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, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
1
CHAPTER 0
ACCOUNTING CYCLE REVIEW
Learning Objective Total # of questions from
1 34
2 133
3 30
4 16
5 185
6 8
7 5
8 20
9 12
TRUE-FALSE—Conceptual
1. Economic events that require recording in the financial statements are called accounting
transactions.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
2. Revenue increases stockholders’ equity and should be recorded whenever cash is received from
customers.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
3. Collection on an account receivable will increase both cash and accounts receivable.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
4. The payment of a liability decreases both cash and accounts payable.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
2
5. If total assets are increased, there must be a corresponding increase in liabilities or a decrease
in stockholders’ equity.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
6. A new account is opened for each transaction entered into by a business firm.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
7. The recording process becomes more efficient and informative if all transactions are recorded
in one account.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
8. An account consists of two parts: (1) a left or debit side and (2) a right or credit side.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
9. For a T account, an account balance is the difference in total dollars between total debit
amounts and total credit amounts.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
10. An account is often referred to as a T-account because of the way it is constructed.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
11. A debit to an account always indicates an increase in that account.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
12. If a revenue account is credited, the revenue account is increased.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
13. The normal balance of all accounts is a debit.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
3
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
14. Debit and credit can be interpreted to mean “bad” and “good”, respectively.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
15. A credit means that an account has been increased.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
16. A decrease in a liability account is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
17. An increase in an asset is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
18. The double-entry system of accounting refers to the placement of a double line at the end of a
column of figures.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None,IMA: FSA
19. A credit balance in a liability account indicates that an error in recording has occurred.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
20. The normal balance of an asset is a credit.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
21. The normal balance of the dividend account is a credit.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
4
22. Assets are decreased with a credit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
23. A debit means that an account has been decreased.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
24. A decrease in a liability is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
25. An increase in an asset is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
26. Liabilities are increased with debits and decreased with credits.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
27. The dividends account is a subdivision of the retained earnings account and appears as an
expense on the income statement.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
28. Revenues are a subdivision of stockholders’ equity.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
29. Under the double-entry system, revenues must always equal expenses.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
30. Transactions are entered in the ledger first and then they are analyzed in terms of their effect
on the accounts.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
5
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
31. Source documents can provide evidence that a transaction has occurred.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
32. Each transaction must be analyzed in terms of its effect on the accounts before it can be
recorded in a journal.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
33. Transactions are entered in the ledger accounts and then transferred to journals.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
34. All business transactions must be entered first in the general ledger.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
35. Transactions are recorded in alphabetical order in a journal.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
36. The journal is a chronological record of all transactions.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
37. A journal is an accounting record in which transactions are initially recorded.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
38. The complete effect of a transaction on the accounts is disclosed in the journal.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
6
39. The account titles used in journalizing transactions need not be identical to the account titles in
the ledger.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
40. The chart of accounts is a special ledger used in accounting systems.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
41. A general ledger should be arranged in financial statement order beginning with the balance
sheet accounts.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
42. The entire group of accounts maintained by a company is referred to collectively as the journal.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
43. Prepaid expenses are assets.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
44. Salaries and wages payable is a type of expense.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
45. Dividends are classified as an expense.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
46. Unearned Service Revenue is classified as a liability on the balance sheet.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
47. Posting is the process of proving the equality of debits and credits in the trial balance.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
7
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
48. Entering transactions into the journal is called posting.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
49. A trial balance is prepared at the beginning of an accounting period.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
50. A trial balance does not prove that all transactions have been recorded or that the ledger is
correct.
Ans: T, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
51. In a trial balance, all debits are listed before all credits.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
52. When the columns of the trial balance equal each other, it means that no errors have occurred
in the recording and posting the transactions.
Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
53. The periodicity assumption states that the economic life of a business entity can be divided into
artificial time periods.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
54. The periodicity assumption is often referred to as the expense recognition principle.
Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
55. The revenue recognition principle dictates that revenue be recognized in the accounting period
in which the performance obligation is satisfied.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
8
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
56. Expense recognition is tied to revenue recognition.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
57. The revenue recognition principle and the expense recognition principle are helpful guides used
in determining net income or net loss for a period.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
58. The expense recognition principle requires that efforts be related to accomplishments.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
59. Recognizing when an expense contributes to the production of revenue is critical.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
60. The expense recognition principle is frequently referred to as the matching principle.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
61. Income will always be greater under the cash basis of accounting than under the accrual basis
of accounting.
Ans: F, LO 5, BT: C, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
62. The cash basis of accounting is not in accordance with generally accepted accounting principles.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Business Economics
63. Adjusting entries are often made because some business events are not recorded as they occur.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
Kieso
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
1
CHAPTER 0
ACCOUNTING CYCLE REVIEW
Learning Objective Total # of questions from
1 34
2 133
3 30
4 16
5 185
6 8
7 5
8 20
9 12
TRUE-FALSE—Conceptual
1. Economic events that require recording in the financial statements are called accounting
transactions.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
2. Revenue increases stockholders’ equity and should be recorded whenever cash is received from
customers.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
3. Collection on an account receivable will increase both cash and accounts receivable.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
4. The payment of a liability decreases both cash and accounts payable.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
2
5. If total assets are increased, there must be a corresponding increase in liabilities or a decrease
in stockholders’ equity.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
6. A new account is opened for each transaction entered into by a business firm.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
7. The recording process becomes more efficient and informative if all transactions are recorded
in one account.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
8. An account consists of two parts: (1) a left or debit side and (2) a right or credit side.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
9. For a T account, an account balance is the difference in total dollars between total debit
amounts and total credit amounts.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
10. An account is often referred to as a T-account because of the way it is constructed.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
11. A debit to an account always indicates an increase in that account.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
12. If a revenue account is credited, the revenue account is increased.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
13. The normal balance of all accounts is a debit.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
3
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
14. Debit and credit can be interpreted to mean “bad” and “good”, respectively.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
15. A credit means that an account has been increased.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
16. A decrease in a liability account is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
17. An increase in an asset is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
18. The double-entry system of accounting refers to the placement of a double line at the end of a
column of figures.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None,IMA: FSA
19. A credit balance in a liability account indicates that an error in recording has occurred.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
20. The normal balance of an asset is a credit.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
21. The normal balance of the dividend account is a credit.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
4
22. Assets are decreased with a credit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
23. A debit means that an account has been decreased.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
24. A decrease in a liability is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
25. An increase in an asset is recorded by a debit.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
26. Liabilities are increased with debits and decreased with credits.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
27. The dividends account is a subdivision of the retained earnings account and appears as an
expense on the income statement.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
28. Revenues are a subdivision of stockholders’ equity.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
29. Under the double-entry system, revenues must always equal expenses.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
30. Transactions are entered in the ledger first and then they are analyzed in terms of their effect
on the accounts.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
5
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
31. Source documents can provide evidence that a transaction has occurred.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
32. Each transaction must be analyzed in terms of its effect on the accounts before it can be
recorded in a journal.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
33. Transactions are entered in the ledger accounts and then transferred to journals.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
34. All business transactions must be entered first in the general ledger.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
35. Transactions are recorded in alphabetical order in a journal.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
36. The journal is a chronological record of all transactions.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
37. A journal is an accounting record in which transactions are initially recorded.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
38. The complete effect of a transaction on the accounts is disclosed in the journal.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
6
39. The account titles used in journalizing transactions need not be identical to the account titles in
the ledger.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
40. The chart of accounts is a special ledger used in accounting systems.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
41. A general ledger should be arranged in financial statement order beginning with the balance
sheet accounts.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
42. The entire group of accounts maintained by a company is referred to collectively as the journal.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
43. Prepaid expenses are assets.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
44. Salaries and wages payable is a type of expense.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
45. Dividends are classified as an expense.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
46. Unearned Service Revenue is classified as a liability on the balance sheet.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
47. Posting is the process of proving the equality of debits and credits in the trial balance.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
7
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
48. Entering transactions into the journal is called posting.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
49. A trial balance is prepared at the beginning of an accounting period.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
50. A trial balance does not prove that all transactions have been recorded or that the ledger is
correct.
Ans: T, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
51. In a trial balance, all debits are listed before all credits.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
52. When the columns of the trial balance equal each other, it means that no errors have occurred
in the recording and posting the transactions.
Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
53. The periodicity assumption states that the economic life of a business entity can be divided into
artificial time periods.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
54. The periodicity assumption is often referred to as the expense recognition principle.
Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
55. The revenue recognition principle dictates that revenue be recognized in the accounting period
in which the performance obligation is satisfied.
, 0- Test Bank for Intermediate Accounting, Eighteenth Edition
8
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
56. Expense recognition is tied to revenue recognition.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
57. The revenue recognition principle and the expense recognition principle are helpful guides used
in determining net income or net loss for a period.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
58. The expense recognition principle requires that efforts be related to accomplishments.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
59. Recognizing when an expense contributes to the production of revenue is critical.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
60. The expense recognition principle is frequently referred to as the matching principle.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
61. Income will always be greater under the cash basis of accounting than under the accrual basis
of accounting.
Ans: F, LO 5, BT: C, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
62. The cash basis of accounting is not in accordance with generally accepted accounting principles.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Business Economics
63. Adjusting entries are often made because some business events are not recorded as they occur.
Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC:
Measurement, AICPA PC: Problem Solving, IMA: Reporting
