Accounts payable are exactly the same as notes payable
false
Assets are all things a funeral director owes
false
The funeral director's original investment is recorded by debiting capital and crediting cash
false
A Profit and Loss Statement is a report that shows income, expenses, and net worth of a business
false
If income is less than expenses, the result is a net loss
True
A Trial Balance is a report that shows the financial condition of a business
false
The debits and credits in any journal must always be equal
true
Expenses for an accounting period will appear on the Income Statement
true
The two ways in which owner's equity can be increased are by revenue and investments
true
Accounts Payable will normally have a credit balance
true
An Income Statement shows net income or loss for a given period of time
true
Any activity of an enterprise which involves the exchange of values is referred to as a transaction
true
If the assets of a business total $60,000 and liabilities are $30,000, the owner's equity would total $90,000
false
The amount of wages paid to employees is shown on the Balance Sheet
false
A ledger is a book of original entry
false
A person to whom debt is owed is called a debtor
false
Transferring information from the journal to the ledger is called footing
false
All revenue accounts will normally have a credit balance
true
The capital account will normally have a credit balance
true
The book of original entry in accounting is called a Journal
true
The totaling of a column in a journal or ledger account is called posting
false
Expense means a decrease in owners equity
true
The left side of a standard account is called the credit side
false
When cash is spent in acquisition of an asset, the net worth is not affected
true
Another term for Balance Sheet is Profit and Loss Statement
false
Accounts Receivable of a business represent all those people to whom a business owes money
false
A cash purchase is recorded in the Purchases Journal
false
The decrease in the value of fixed assets due to normal wear and tear is called depreciation
true
Accounts Payable represents all those people that owe your business money
false
The Statement of Financial Condition is a report that shows assets, liabilities, and net worth of a business
true
Bookkeeping and accounting a synonymous terms
false
Transactions in the journal are recorded in chronological order
true
The net worth of a business is the difference between assets and liabilities
true
An entry on the debit side of an asset account records an increase for that asset
true
Cash transactions are recorded in the Cash Receipts Journal
false
Accounts with creditors are called Accounts Receivable
false
When a worksheet is prepared, it's not necessary for the business to prepare a Profit and Loss Statement or Balance Sheet
false
A person/concern, usually a bank, that has been ordered to make payment on a check/draft is a drawee
true
A person who signs a check/draft ordering payment to be made is the drawer
true
The signature of the payee/other holder placed on the back of a check/other paper is an endorsement
true
Any consecutive 12 month period is a physical year
false
Another term for fixed liability is current liability
false
The difference between gross sales and sales returns and allowances is net sales
true
Another term for Owner's Equity is Net Worth
true
A written promise for a customer to pay the business a sum of money at a future date is an Accounts Receivable
false
A written promise to pay a creditor an amount in the future is called an Accounts Payable
false
Prepaid Expenses (ie insurance) are classified as asset accounts
true
One who has made a sale is called a vendor
true
One to whom a sale has been made is a vendee
true
When funeral director makes a payment on a funeral coach which was purchased on credit, he would debit Accounts Payable and credit Cash
true
Another term for Profit and Loss Statement is Income Statement
true
The cash basis of accounting is used primarily by a personal service enterprise
true
Recording expenses when they're paid and income when it's received describes the cash basis of accounting
true
The difference between the two sides of an account is called an account number
false
All expense and revenue accounts are summarized and closed at the end of an accounting period
true
The chart of accounts us usually found at the beginning of the ledger
true
The process of determining whether the amount of cash (on hand & in bank) is the amount that should be there according to the records is called proving cash
true
The main purpose of petty cash is to eliminate the need to write checks for small amounts
true
To establish a petty cash fund, you debit cash and credit petty cash
false
A check that a bank refuses to pay is described a dishonored check
true
The most common reason checks are returned unpaid is due to insufficient funds
true
Canceled checks are of no value and should be thrown away
false
In a personal service enterprise, the chief source of revenue is derived from services rendered
true
Accumulated Depreciation is an example of a contra asset account
true
A Post Closing Trial Balance is made just prior to posting the closing entries
false
Bookkeeping is the recording phase of the accounting process
true
Proprietorship, net worth, and capital are all synonymous terms for owner's equity
true
The liabilities of a business equal $30,000 and the owner's equity is $40,000. Your assets are $10,000.
false
The two most important formal financial statements are the Income Statement and the Trial Balance
false
To increase the liability account, you debit the account
false
To increase the asset account, you debit the account
true
When an expense is incurred, either the assets are reduced or the liabilities are increased
true
Transactions involving revenue and expenses always cause a change in the owner's equity
true
Revenue and expense accounts are actually temporary owner's equity accounts
true
If the footings of an account are equal in amount, the account is said to be balanced
true
An account is a device for recording the changes in the fundamental accounting elements
true
The transfer of data from the journal to ledger is called posting
true
The terms "income" and "overhead" are synonymous
false
Net Worth has the same meaning as Owner's Equity
true
The abbrev. for Debit is Dt.
false
Defer means to delay until later date
true
The process of recording business transactions in a journal is called footing
false
Negotiable instruments refers to checks, notes, and other business papers that may be transferred by endorsement
true
The amount of pay after deductions have been subtracted is called gross pay
false
FOB is the abbrev for "footing on balance
false
The one to whom a sale has been made is the drawee
false
The terms "unearned income" and "deferred income" are synonymous
true
A partnership is a business that is owned by 2+ individuals
true
A fiscal year is any consecutive 12 month period ending on the last say of any month except December
true
EOM is abbrev for "End of Month
true
Cost is the amount a fixed asset will sell for after it no longer has any use within the business
false
Book Value is the cost of forms and records needed for recording transactions
false
A bill is a statement indicating charges for goods/services
true
A debtor is a business/individual who owes a debt
true
The person/company whose name is written on the back of a check is an endorser
true
FICA is abbrev for "First In Credit Assets
false
A bank draft is a check that is drawn by one bank on another in which it has funds deposited
true
A check drawn by a bank on its own funds and signed by the cashier is known as a cashier's check
true
Property of relatively permanent nature used in the operation of a business and not intended for resale are known as current assets
false
COD is abbrev for "Collection On Delivery
true
Accrued expenses refers to expenses incurred and paid during an accounting period
false
Adjusting entries are made at the conclusion of a fiscal period to bring accounts up to date
true
A cash payments journal is a book of original entry in which only cash receipts are recorded
false
A check register is an expanded trial balance for sorting and classifying account balances before preparing financial statements
false
The period of time for the date of a note to the maturity date is known as the fiscal period
false
Income and expense accounts are temporary owner's equity accounts
true
An endorsement which limits the use of funds to the purpose stated would be known as a restrictive endorsement
true
A special journal would be designed to accumulate data about only one kind of business transaction
true
Prepaid expenses refers to goods/services that have been paid for but not yet used
true
Profit and Loss Statement and Balance Sheet are synonymous terms
false
Income that isn't the direct result of regular trading activities is known as other income
true
Subsidiary Ledger is used for recording details of a particular account in the general ledger
true
The abbrev for credit is "Crt
false
A credit memorandum grants credit to a buyer for a purchase return/purchase allowance
true
A Statement of Operations would provide the same information as found on an Income Statement
true
A sales journal is used only for recording the sale of merchandise on credit
true
A purchase invoice is a document received by the buyer from the seller that provides information for recording a purchase transaction
true
Operating expenses are the expenses incurred in the normal operation of a business
true
In order to determine working capital the accountant uses the formula: current assets - current liabilities = working capital
true
A group of accounts which appear on the balance sheet and the income statement is referred to as the general ledger
true
Unwritten promises by customers to pay the business at a later date for goods sold to them are called accounts receivable
true
An asset is anything of value that is owed
false
The terms proprietorship, capital, and net worth are synonymous with owner's equity
true
The basic accounting equation is: liabilities = assets - owner's equity
false
Any financial activity of a business is referred to as a transaction
true
The purchase of equipment for cash may result in either an increase / decrease in liability
false
If office equipment is purchased on credit that would cause assets to increase and result also in an equal increase in liabilities
true
Two formal financial statements are Income Statement and the Balance Sheet
true
The Income Statement shows the net profit/loss for a specific date
false
Double entry bookkeeping shows an increase/decrease in two aspects of the recording cycle
true
Three major parts of the T-account are the account title, the debit side, the credit side
true
Increases in liabilities are recorded on the left side of the account
false
Increases in assets are recorded on the right side of the account
false
Increase in owner's equity are recorded on the right side of the account
true
Revenue refers to an increase in owners equity
true
Expense refers to an increase in owners equity
false
Revenue and expenses are recorded in temporary proprietorship accounts
true
The expense and revenue summary accounts is a temporary owners equity account
true
Totaling the debit and credit amounts in each account is called footing the columns
true
A list of all of the accounts showing the title and balance of each account is called a trial balance
true
A trial balance is a formal statement or report
false
The book of original entry is called the ledger
false
The act of recording transaction in a journal is called journalizing
true
In the chart of accounts the assets come first, then liabilities, and owners equity
true
Transactions are listed in alphabetical order
false
Transactions are transformed from ledger to journal
false
Posting is the process of transferring information from journal to ledger
true
It's necessary to foot accounts preparatory to taking a trial balance
true
Footings should be done in ink and in large numerals
false
A Balance Sheet provides information on the assets, liabilities, and owners equity of a business as of a specified date
true
Cash can be expanded to include checks, drafts, and money orders, currency and coins
true
Proving cash is an accounting process of insuring that cash on hand and in the bank is the amount that should be there, according to records
true
A petty cash fund is established for paying small amounts
true