1.

Unearned income is a liability.

A) True B) False

2.

Prepaid expenses are assets.

A) True B) False

3.

A business with no cash is insolvent.

A) True B) False

4.

Assets must always equal liabilities plus capital.

A) True B) False

5.

Assets normally have credit balances.

A) True B) False

6.

Balance sheets report profitability.

A) True B) False

7.

All payables are liabilites.

A) True B) False

8.

FOB destination means buyer pays freight.

A) True B) False

9.

Accrued revenue, by defintion, is unearned.

A) True B) False

10.

Inventory is a current asset.

A) True B) False

11.

Debits reduce liabilites.

A) True B) False

12.

Sales returns are debited to inventory at cost.

A) True B) False

13.

Sales minus sales returns, allowances, and discounts equals cost of sales.

A) True B) False

14.

Withdrawals reduce net income.

A) True B) False

15.

A business with more debt than equity is insolvent.

A) True B) False

16.

A business with more equity than debt is profitable.

A) True B) False

17.

Net losses reduce capital.

A) True B) False

18.

FIFO leaves the most recent costs in inventory.

A) True B) False

19.

When creditors are paid, cash is always credited.

A) True B) False

20.

There are two types of journal entires, simple and complex.

A) True B) False

21.

Trade discounts reduce transportation costs.

A) True B) False

22.

Cash discounts taken are credited to inventory.

A) True B) False

23.

Cash discounts given are subtracted from sales.

A) True B) False

24.

Recording unearned income requires a credit to cash.

A) True B) False

25.

Journal entries must always contain both debits and credits.

A) True B) False

26.

All adjusting entries always contain both income statement and balance sheet accounts.

A) True B) False

27.

Equity and capital are the same.

A) True B) False

28.

Balance sheet accounts are either assets or liabilites.

A) True B) False

29.

Debits reduce assets.

A) True B) False

30.

when recording income, a revenue account must always be credited.

A) True B) False

31.

All expense accounts, even prepaid expenses, normally have debit balances.

A) True B) False

32.

Accounts payable would be debited to record an expense owed.

A) True B) False

33.

A seller would record freight costs paid FOB shipping as a credit.

A) True B) False

34.

When receivables are collected, cash is always debited.

A) True B) False

35.

When buyers return inventory, sellers credit cost of sales.

A) True B) False

36.

Copyrights are amortized.

A) True B) False

37.

Inventory is depleted.

A) True B) False

38.

Land depreciates.

A) True B) False

39.

A petty cash shortage would be recorded as a debit to cash short and over.

A) True B) False

40.

When notes are collected, cash is debited for their maturity value.

A) True B) False

41.

When reconciling cash, deposits in transit are added to the depositor's book balance.

A) True B) False

42.

Trade discounts are recorded on worksheets.

A) True B) False

43.

Accuumlated depreciation is a contra-asset.

A) True B) False

44.

Depreciation is an expense that reflects the cost of uncollectible receivables.

A) True B) False

45.

Revenue would appear on a post closing trial balance as a credit.

A) True B) False

46.

Income summary is closed to capital.

A) True B) False

47.

Adjustments are recorded on worksheets.

A) True B) False

48.

Journalizing follows posting.

A) True B) False

49.

All general ledger accounts are adjusted and closed at the end of the accounting cycle.

A) True B) False

50.

Supplies are assets.

A) True B) False