Financial Accounting Information for Decisions 6th Edition by Wild Test Bank

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Chapter 02

 Analyzing and Recording Transactions

True / False Questions
 

[Question]

1. Accounting records are also referred to as the books.
Answer:  TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C1
 

[Question]

2. The first step in the analyzing and recording process is to analyze each transaction and event from source documents.
Answer:  TRUE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C1
 

[Question]

3. Preparation of a trial balance is the first step in the analyzing and recording process.
Answer:  FALSE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C1
 

[Question]

4. Source documents provide evidence of business transactions and are the basis for accounting entries.
Answer:  TRUE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2
 

[Question]

5. Items such as sales slips, invoices, checks and purchase orders are source documents.
Answer:  TRUE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2
 

[Question}

6. An account is a record of increases and decreases in a specific asset, liability, equity, revenue or expense item.
Answer:  TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2
 

[Question]

7. According to the seller, a customer's promise to pay is called an account payable.
Answer:  FALSE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2
 

[Question]

8. Dividends are a type of business expense.
Answer:  FALSE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2
 

[Question]

9. As prepaid expenses are used up, the costs of these assets become expenses.
Answer:  TRUE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-C2
 

[Question]

10. Land and buildings are generally recorded in the same ledger account.
Answer:  FALSE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-C2
 

[Question]

11. It is not necessary to keep separate accounts for all items of importance for business decisions.
Answer:  FALSE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-C2
 

[Question]

12. Unearned revenues are classified as liabilities.
Answer:  TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-C2
 

[Question]

13. Cash dividends should be treated as an expense to the business.
Answer:  FALSE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-C2
 

[Question]

14. When a company provides services for which cash will not be received until some future date, the company should record unearned revenue for the amount charged to the customer.
Answer:  FALSE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-C2
 

[Question]

15. The chart of accounts is a list of all the accounts used by a company and a corresponding identification number.
Answer:  TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C3