expense, asset, liability, or owner's equity item. 3) Prepaid insurance is an example of an asset that will be consumed in the operation of the business; and as it is consumed, it will become an expense for the time period in which it was consumed. 4) When a firm collects money in advance of providing a service or delivering a product to a customer, the amount should be recorded as a prepaid asset. 5) The term credit, as it is used in recording journal entries, means to increase the balance of an account. 6) Any transaction, no matter how complex, can be recorded in a general journal under the double- entry accounting system. 7) A journal entry in which more than two accounts are involved is known as a combined journal entry. 8) A journal is known as a book of final entry. 9) The group of accounts used by a business in recording its transactions is known as the ledger. 10) Transcribing the debit amounts and the credit amounts from the general journal to the accounts in the ledger for summarization is known as posting. 11) When posting manually to the general ledger, it is not necessary to record the number of the posted account in the general journal when you are certain that you have posted to the correct account. 12) Electronic posting is more complicated than manual posting. 13) A list of all the accounts with balances, and their respective balances, is called a balance sheet or statement of financial position.
expense, asset, liability, or owner's equity item. 3) Prepaid insurance is an example of an asset that will be consumed in the operation of the business; and as it is consumed, it will become an expense for the time period in which it was consumed. 4) When a firm collects money in advance of providing a service or delivering a product to a customer, the amount should be recorded as a prepaid asset. 5) The term credit, as it is used in recording journal entries, means to increase the balance of an account. 6) Any transaction, no matter how complex, can be recorded in a general journal under the double- entry accounting system. 7) A journal entry in which more than two accounts are involved is known as a combined journal entry. 8) A journal is known as a book of final entry. 9) The group of accounts used by a business in recording its transactions is known as the ledger. 10) Transcribing the debit amounts and the credit amounts from the general journal to the accounts in the ledger for summarization is known as posting. 11) When posting manually to the general ledger, it is not necessary to record the number of the posted account in the general journal when you are certain that you have posted to the correct account. 12) Electronic posting is more complicated than manual posting. 13) A list of all the accounts with balances, and their respective balances, is called a balance sheet or statement of financial position.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Just answer true or false. no need for an explanation
Transcribed Image Text:19) On the chart of accounts revenues may be numbered in the 400's followed by expenses
numbered in the 500's.
20) The left side of an account is always the debit side and always the increase side.
21) The normal balance for assets and expenses is a debit balance. The normal balance for liabilities,
equities (except withdrawals), and revenues is a credit balance.
22) The Cash account has debits totaling P 4,500 and credits totaling P 4,600. The account balance
is a normal balance of P100.
Transcribed Image Text:Write TRUE if the statement is correct and write FALSE if the statement is wrong.
1) Cheques, invoices, and sales receipts are examples of business papers.
2) An account is used to record and summarize the increases and decreases in each type of revenue,
expense, asset, liability, or owner's equity item.
3) Prepaid insurance is an example of an asset that will be consumed in the operation of the
business; and as it is consumed, it will become an expense for the time period in which it was
consumed.
4) When a firm collects money in advance of providing a service or delivering a product to a customer,
the amount should be recorded as a prepaid asset.
5) The term credit, as it is used in recording journal entries, means to increase the balance of an
account.
6) Any transaction, no matter how complex, can be recorded in a general journal under the double-
entry accounting system.
7) A journal entry in which more than two accounts are involved is known as a combined journal
entry.
8) A journal is known as a book of final entry.
9) The group of accounts used by a business in recording its transactions is known as the ledger.
10) Transcribing the debit amounts and the credit amounts from the general journal to the accounts
in the ledger for summarization is known as posting.
11) When posting manually to the general ledger, it is not necessary to record the number of the
posted account in the general journal when you are certain that you have posted to the correct
account.
12) Electronic posting is more complicated than manual posting.
13) A list of all the accounts with balances, and their respective balances, is called a balance sheet
or statement of financial position.
14) A trial balance with equal debit and credit totals is proof that no errors occurred in the journalizing
or posting procedures used by the bookkeeper.
15) Cash, Prepaid Insurance, Office Supplies, and Rent Expense are accounts that will increase
when debited.
16) Prepaid Insurance, Cash, Accounts Receivable, Notes Receivable, Land, and Unearned
Revenues are all classified as asset accounts.
17) All receivables are classified as liability accounts and all payables are classified as asset
accounts.
18) The owner's Capital account will increase with additional investment, increase with net income
(revenues larger than expenses) and decrease with withdrawals by the owner.
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