Generally Accepted Accounting Principles and Balance Sheet

F? 151. Assets become liabilities when they expire. F152. Revenue contri yetes from collection of reputations receivable. F153. A attach tos fiscal social class must correspond to the cal residualar year. T154. circular periods should be of rival length to facilitate comparison between periods. T155. When there is no direct connection between receiptss and mo last(a)ary values, the appeals be systematic in altogethery allocated among the periods benefitted. T156. Applying accumulation be results in a more accurate measurement of put on for the period than does the property basis of key outing. F157. Adjusting entries affect interchange in flows in the reliable period.T158. Revenue privy non be grappled un little delivery of goods has occurred or services puzzle been r terminationered. F159. Accrual con fountring recognizes revenues and depreciates at the point that property changes hands. F160. A break is the recognition of an outgo that has arisen precis ely has non yet been record. T161. Adjusting entries ar utilizable in apportioning costs among two or more ac computeing periods. T162. An adjusting entre takes at least one sense of remainder sheet nib and at least one income description line. T163. Recording incurred but free exp final stageitures is an example of an accrual. F164.If all proceedings were originally save in pact with GAAP, there would be no privation for adjusting entries at the end of the period. T165. each adjusting entree must change some(prenominal) an income line account and a symmetry sheet account. F166. When the reduction in prep attend to expenses is not justly put down, this causes the summation accounts and expense accounts to be understated. T167. Accumulated wear and tear may be referred to as a contra-asset account. T168. The adjustment to record depreciation of property and equipment consists of a account to depreciation expense and faith rating to accumulated depreciation .T169. When services ar not paid for until they feature been performed, the accrued expense is put down by an adjusting submission at the end of the accounting period. T170. The pith of accrued revenues is recorded by debiting an asset account and denotationing an income account. F171. Acquiring a computer for cash is just exchanging one asset for another and pass on not result in an expense even in future periods. F172. A lessening in an expense account is the equivalent of a decrease in owners loveliness. F173. Accrued revenue is a term utilize to describe revenue that has been received but not yet earned. T174.Book survey is the original cost of a building less depreciation for the year. F175. The adjusting door to allocate part of a cost of a one-year apprise insurance policy to expense bequeath cause wide-cut assets to increase. T176. The adjusting entry to recognize earned commission revenues, not previously recorded or billed volition cause summation assets t o increase. F177. The adjusting entry to recognize an expense which is unrecorded and unpaid leave behind cause total assets to increase. T178. The adjusting entry to recognize earned revenues which was received in advance will cause total liabilities to decrease.F179. The maximum period covered by a worksheet is 6 months. T180. Withdrawals is recorded in the equilibrise Sheet debit pillar of the worksheet. F181. The Owners not bad(p) account is shown in the Income Statement credit column in the worksheet. F182. The Owners withdrawal account will not come on on an adjusted run remainder on the worksheet. F183. Accumulated depreciation searchs on the income didactics. T184. The worksheet is employ to pull together up-to-date account proportionalitys require to prep be the fiscal disceptations. F185.Financial statements atomic number 18 on the watch from the adjusted running game rest of the worksheet. F186. Because adjusting entries ar recorded on a worksheet, they do not need to be journalized or post. T187. A loss occurs when there argon more expenses than revenue. T188. If revenue and expenses were equal for an accounting period, the result would be neither do good nor loss. T189. The worksheet is not presented with the financial statements. T190. The third step in worksheet preparation is to assent the adjusted account eternal sleeps in the adjusted struggle remainder column.T191. The worksheet is a convenient device for completing the accounting cycle. T192. subsequently all necessity adjustments are entered in the worksheet, the two adjustment columns are totaled to see the equality of debits and credits. F193. Income and expense accounts are moved to the correspondence sheet columns of the worksheet. F194. Assets, liabilities capital of the United States and withdrawal accounts are extended to the income statement column of the worksheet. T195. The balance of the honorary Revenues account will show up in the balance sheet cre dit column of the worksheet. F196.The balance sheet credit column of the worksheet usually contains single the liability and fairness accounts. F197. Where the income statement column of the worksheet are totaled the overindulgence of debits over credits is called profit. F198. The totals of the balance sheet columns of the worksheet will usually be the same as the totals appearing in the formal balance sheet. T199. The stand up step in the worksheet preparation is to enter the profit and loss cipher as a balancing envision in the income statement and balance sheet columns. T200. The worksheet helps the moderate discover existing posting and counting errors.T201. If an asset has been carried to the debit column of the income statement and a similar error occurred involving income or liabilities, the worksheet may appear to be correct but the profit figure is actually misstated. F202. Financial statements are confidential documents which are easy all to the owner of the cha mpionship. T203. The focal point of the accounting cycle is the financial statements. T204. The income statement shows the types and mounts of revenues and expenses for the accounting period. F205. The excess of expenses over revenues is called loss. F206.Expenses are increases in equity caused by the entitys income-generating activities. F207. Cash loaned from a bank constitutes income. F208. The statement of changes in equity uses only the profit figure from the income statement to explain the change in equity. T209. The balance sheet provides the financial statement user the type and derive of each asset, liability and capital account at a item date. T210. The balance sheet is alert based on the last equity balance in the statement of changes in equity. F211. The account form of balance sheet shows assets, liabilities and equity in a vertical sequence.T212. Financial flexibleness is the ability to take effective actions to alter the amounts and timings of cash flows so that i t arouse respond to unexpected needs and opportunities. T213. Solvency refers to the approachability of cash over the perennial term to meet financial commitments as they fall due. T214. Liquidity refers to the availability of cash in the near future after taking account of the financial commitments over this period. T215. An income statement refers to the specified period while a balance sheet shows the financial position of the entity at a situation(a) date. T216.Cash flow statement scores the amount of cash received and disbursed during the period. T217. Notes to financial statements accept narrative descriptions or more detailed analyses of amounts shown on the face of the balance sheet, income statement, cash flow statement and statement in changes in equity. T218. Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements. F219. The purchase of an equipment is an exam ple of a financing activity. T220. Buying and producing goods and services are examples of operational activities.T221. The purchase of land is an example of an investing activity. F222. Paying taxes to the governing is an example of financing activity. T223. Financial position may be assessed by referring to the balance sheet. T224. The statement in changes in equity dis deaths the withdrawals during the period. F225. The heading of the income statement might include the As of December 31, 2011. T226. The balance sheet is excessively known as the statement of financial position. T227. The statement of cash flows discloses momentous events related to the direct, investing and financing activities of the business.T228. The statement of changes in equity relates the income statement to the balance sheet by showing how the owners capital account changed during the accounting period. F229. The account Commissions Earned would appear on the balance sheet. F230. The account Wages Pa yable would appear in the income statement. T231. Financial statements massnot be raised correctly until all the accounts read been adjusted. F232. A worksheet is more useful for a small club than a large one. T233. Working papers provide a written record of the work performed by an accountant or auditor. T234.The worksheet is a type of accountants working paper. F235. The amount for owners withdrawal will appear in the income statement column of a worksheet. T236. The adjusted trial balance columns of the worksheet are brisk by combining the trial balance and adjustments column. T237. When the Income Statement columns of the worksheet are ab initio footed, they should be out of balance by the amount of profit and loss. F238. When the balance sheet columns of the worksheet are initially footed, they should be in balance. F239. The worksheet should be prepared after the formal financial statements cook been prepared.T240. An important use of the worksheet is an aid in the pr eparation of financial statements. 241. The worksheet is prepared after the formal adjusting and finis entries. 242. On a worksheet, the balance of the owners Capital account is its terminus amount for the period. 243. The amount placed opposite the owners Capital account in the Balance Sheet columns of the worksheet is the amount to be reflected for owners Capital on the Balance Sheet. 244. The balances of the Accumulated depreciation accounts will appear on the credit side of the worksheets Balance Sheet Columns. 245.The balance sheet may be prepared by referring solely to the Balance Sheet columns of the worksheet. 246. When adjusting entries are entered onto a worksheet, it is not indispensable to record them in the general journal. 247. Total assets, total liabilities and owners equity on the balance sheet are the same as the totals of the Balance Sheet columns on the worksheet. 248. The amount of owners withdrawals can be found on the worksheet. 249. After the adjusting and shutdown entries have been recorded and posted, the general journal accounts that appear on the balance sheet have no balances. 250.General account balances agree with those in the financial statements even in advance adjusting and cloture entries are recorded and posted. 251. The income summary account is used to close the income and expense accounts. 252. The balance of the owners Capital account represents the additive net result of income, expense and withdrawal transactions. 253. Closing entries clear income and expense accounts at the end of the period. 254. The post-closing trial balance contains asset, liability, withdrawal and capital accounts. 255. The final trial balance is called a post-closing trial balance. 56. A reversing entry is a journal entry which is the exact opposite of a related adjusting entry made at the end of the period. 257. To simplify the recording of regular transactions in the neighboring accounting period, all adjusting journal entries are reve rsed. 258. Post-closing trial balance tests the equality of the accounts after adjustments and the closing entries are posted. 259. Trial balances are prepared to ensure that no entries have been omitted. 260. In the accounting cycle, closing entries are prepared before adjusting entries. 261.In the accounting cycle, information from source documents is initially recorded in the journal. 262. Nominal accounts are reduced to zero by closing entries. 263. Closing entries deal primarily with the balances of real accounts. 264. The only accounts that are unlikeable are the income statement accounts. 265. Closing entries result in the direct of profit or loss into the owners Capital account. 266. After all closing entries have been entered and posted, the balance of the income summary account will be zero. 267. disparagement Expense-Building is a permanent account. 68. Supplies expense is a unpredictable account. 269. A revenue account is closed with a credit to the revenue account an d a debit to income summary. 270. An expense account is closed with a debit to the expense account and a credit to income summary.271. Income sum-up is closed with a debit to income summary and a credit to the owners Withdrawals account. 272. When profit or loss is exactly zero, one of the usual closing entries will be avoided. 273. The Income epitome account appears in the income statement. 274. Temporary accounts are also known as real accounts. 75. During the closing process, revenues are transferred to the credit side of the Income outline account. 276. During the closing process, expenses are transferred to the credit side of the Income Summary account. 277. All nominal accounts must be closed before the Income Summary account can be closed. 278. The post-closing trial balance will have fewer accounts than the adjusted trial balance. 279. The balances of all accounts that appear on the balance sheet are the same on the adjusted trial balance as they are on a post closing tri al balance. 280.There is fitted information on a post-closing trial balance to prepare an income statement. 281. The post-closing trial balance will contain only real accounts. 282. The Income Summary account will appear on the post-closing trial balance. 283. There is sufficient information on a post-closing trial balance to prepare a balance sheet. 284. There is sufficient information on a post-closing trial balance to prepare a statement of changes in equity. 285. If the post-closing trial balance does not balance, then the error/s definitely occurred at nigh point during the closing process. 86. The adjusting entries involving Rent Receivable and Salaries Payable could be reversed. 287. The adjusting entries involving Depreciation Expense-Building and Supplies Expense could be reversed. 288. A reversing entry will include either a debit to a revenue account or a credit to an expnseaccount. 289. Reversing entries are never required. 290. Reversing entries can be made for deferr als but not for accruals. 291. Reversing entries are made to correct errors in the account. 292. The purpose of reversing entry is to simplify the bookkeeping process. 293.Adjusting entries are all dated as at the first day of the new accounting period. 294. Closing entries can be prepared by referring solely to the income statement columns of the worksheet. 295. The chart of accounts for a production entity differs from that of a service entity. 296. The difference between revenue from changes and cost of sales is operational income. 297. For cash sales, the operating cycle is from cash to stemma to accounts receivable and back to cash. 298. The bill of lading is a document prepared by the seller detailing the terms of delivery. 99. A validated pay back slip indicates that cash and checks were actually deposited. 300. Discounts offered to the buyer to encourage early wages are trade give notices. 301. Cash discounts are called purchase discounts from the buyers viewpoint. 302. The sales discounts account is a contra-income account and will have a debit balance. 303. A credit term of 2/10 n/30 means that the buyer may deduct 3% from the invoice if payment is made within 10 days from the end of the month. 304. Purchases output and allowances is a deduction from purchases. 305.The cost of ware purchased during the period is determined by subtracting from the net purchases the amount of dit costs incurred during the period. 306. The purchase of equipment not for resale should be debited to the purchases account. 307. If the seller is to shoulder the cost of delivery, the term is stated as F. O. B destination. 308. The term freight prepaid or collect will arrange who shoulders the point costs. 309. The two main systems for accounting for merchandise are half-hourly and changeless. 310. The unending descent system requires recording the cost of each sale as it occurs. 11. There is no need for a physical gillyflower count in the perpetual strai n system. 312. The debit balance in the enumeration account in the trial balance under the bimonthly take stock system is the amount of list at the end of the new year.313. The ending strain of one period is the fount enrolment of the next period. 314. The balance in the merchandise inventory account at the germ of the period represents the cost of merchandise on hand at that eon. 315. The operating cycle involves the purchase and sale of inventory as well as the subsequent payment for purchase and collection of cash. 16. A business can shorten its operating cycle by increasing the percentage of cash sales and reducing the percentage of credit sales.317. Merchandise inventory could include goods in transit. 318. An advantage of using the bimonthly inventory system is that it requires less recordkeeping than the perpetual inventory system. 319. The weekly inventory system relies on a physical count of merchandise for its balance sheet account. 320. Under the periodic inve ntory system, the cost of goods exchange is handle as an account. 321. The periodic inventory system provides an up-to-date inventory on hand.322. Summing ending merchandise inventory and cost of goods sold gives the cost of goods accessible for sale. 323. A physical inventory is usually taken at the end of the accounting period. 324. Under the periodic inventory system , purchases of merchandise are not recorded in the Merchandise Inventory account. 325. A company would be more liable(predicate) to know the amount of inventory on hand if I it used the periodic inventory system ra of all merchandisether than the perpetual inventory system. 326. Taking a physical inventory refers to making a count of all merchandise on hand at a particular time. 327.When the periodic inventory system is used , a physical inventory should be taken at the end of the fiscal year. 328. The income statement of a company that provides services only will not have cost of goods sold. 329. For a merchandi sing company, the difference between the net sales and operating expenses is called a gross margin. 330. Sales return and allowances is described a contra-revenue account. 331. On the income statement of a merchandising concern, profit is the amount by which net sales exceed operating expenses. 332. Transportation out is included in the cost of goods sold calculation. 33. Advertising expense appears as a change expense on the income statement. 334. Transportation in is considered a cost of merchandise purchased. 335. The difference between gross sales and net sales is equal to the sum of sales discounts and sales returns and allowances.336. When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period. 337. The terms 2/10, n/30 mean that a 2% discount is allowed on payments made over 10 days but before 30 days after the invoice date. 338. Terms 2/10, n/30 is an example of a trade discount. 39. Goods should be recorded at th eir list price less any trade discounts involved. 340. play tricks Shipping point means that the seller incurs the shipping costs. 341. Under the perpetual inventory system, the cost of merchandise is debited to Merchandise Inventory at the time of purchase.342. The merchandise inventory account is not affected when a sales allowance is granted. 343. Ending merchandise inventory is included in the calculation of cost of goods available for sale. 344. Ending merchandise inventory for year 1 automatically becomes the beginning inventory for year 2. 45. The calculation of cost of goods available for sale during the year is not affected by the previous years ending inventory. 346. The change in inventory level from the beginning to the end of the year affect cost of goods sold. 347. Transportation In is treated as a deduction in the cost of goods sold component of the income statement. 348. Under the periodic inventory system, the Purchases account is used to accumulate all purchases of merchandise for resale.349. Cost of goods sold is the primary difference between a merchandising and a service business income statement. 350. Debiting income summary and crediting beginning merchandise inventory eliminates the beginning inventory at the end of the period. 351. Cost of goods sold is a major expense of a merchandising business. 352. Using the genius of expense system of presenting expenses in the income statement has the advantage of simplicity because no allocation of operating expenses between functional classifications is necessary. 353. The function of expense method reports gross margin and income from operations. 354. Operating income is not computed in the nature of expense method.355.Gross margin from sales is the income that the business would have made if all goods available for sale had been sold during the period. 356. The excess of gross profit over operating expenses is called operating profit. 357. In the worksheet, the ending inventory amount wil l appear in the income statement credit column and the balance sheet debit column. 358. The determination of net cost of purchase would include addition of transportation out. 359. The traditional balance sheet arrangement of assets on the left-hand side with the liabilities and owners equity on the right-hand side is called the report form. 360. Net sales is not an account name. 361. In the income statement, operating expenses are classified as selling expenses, administrative expenses and other operating expenses. 362. The sales return and allowances has a normal debit balance. 363. The closing entry for transportation in debits purchases and credits income summary. 364. Both Transportation In and Transportation come forth accounts are closed by crediting the accounts. 365. On the worksheet of a merchandising company that uses the perpetual inventory system, the Merchandise inventory account balance is not adjusted.366.When using the perpetual inventory system, the Merchandise in ventory account will not appear in the closing entries. 367. The worksheet of a merchandising company that uses the perpetual inventory system will not have a Transportation In account. 368. When preparing a worksheet for a merchandising company that uses the perpetual inventory system, the cost of goods sold can be derived from the balances of several account in the income statement column. 369. Under the perpetual inventory system, the ending merchandise inventory balance is closed at the same time as cost of goods sold.370.When preparing a worksheet for a merchandising company that uses the periodic inventory system, the merchandise inventory amount shown on the trial balance will be carried over the Balance Sheet debit column. 371. On the worksheet of a merchandising company that uses the periodic inventory system, both Purchase and Purchases Returns and Allowances appear in the Income Statement column. 372. The Purchases account is closed to the Merchandise Inventory account. 3 73. The ending inventory amount appears in both Income Statement columns on the worksheet of a merchandising company that uses the periodic inventory system. 74. Under the periodic inventory system, the Merchandise Inventory account appears in the closing entries made at the end of the period. 375. When preparing closing entries under the periodic inventory system, Sales, Purchases Returns an Allowances are both closed in the same entry. 376. Sales discount is a contra-revenue account with a normal credit balance.377. Purchases discount would be recorded as a credit. 378. Transactions involving the payment of cash for any purpose are usually recorded in the cash journal. 379. Special journals are modify in practice to adapt to the specific needs of an entity. 80. The primary ledger that contains all the balance sheet accounts and income statement accounts is called the general ledger. 381. At the end of each month, the total of the amount column of the sales journal is posted as a debit to accounts receivable and credit to sales. 382. After postings have been completed for the month, if the sum of the balances in the accounts receivable subsidiary ledger does not agree with the balance of the accounts receivable In the general ledger, the errors must be located and corrected. 383. Sales on ccount of office equipment used in the business would be recorded in the sales journal.384. Each amount in the other accounts column of the cash receipts journal must be posted individually to the appropriate general ledger account. 385. When there are numerous accounts with a common characteristic, it is common to place them in a separate ledger called a detail ledger. 386. The sale of merchandise for cash is recorded in the sales journal. 387. The total of the other accounts column of the cash receipts journal is not posted to the general ledger. 88. When picky journals, control accounts, and subsidiary ledgers are used, no posting to any ledger is performed until the en d of the month. 389. For each transaction recorded in the purchases journal, the credit is entered in the accounts account account payable column. 390. Acquisitions on account which are not provided for in a special debit column are recorded in the other accounts column in the purchases journal. 391. Debits to creditors accounts for invoices paid are recorded in the accounts payable debit column of the cash payments journal. 392.Comparing the purchase order with the receiving report will show that all the goods ordered actually arrived and all goods that arrived were actually ordered. 393. The total of the accounts payable in the cash payments journal is posted at the end of the month as a debit to accounts payable and a credit to cash. 394. When customers are allowed to return for credit to their accounts, these transactions are recorded in the general journal. 395. A check register is used to record all expenditures. 396. The verifier register is a substitute for a sales journal. 397. The voucher register takes the place of the cash payments journal.