1. Every accounting transaction affects both the balance sheet and the income statement. (Points : 5) True False

2. An independent auditor's (CPA's) report is a guarantee that the financial statements are free from fraud or material error. True False

3. GAAP stands for Generally Accepted Auditing Procedures.

True False

4. Accumulated depreciation is increased when depreciation is recognized.

True False 5. A cost can be an asset or expense depending on whether the future economic benefits have expired or not.

True False 6. With few exceptions, the balance of all accounts should be on the side of the T account that causes the increase. True False 7. The credit side of an account is the right side while the debit side is the left side. True False 8. Financial statements should be prepared before any adjustments are made. True False 9. The excess of current assets over current liabilities is referred to as working capital. True False 10. The general ledger is sometimes called the book of original entry because it is the accounting record where transactions are first recorded. True False