8. 2-4 Test Bank for Accounting Principles, Sixth Edition TRUE-FALSE STATEMENTS 1. A new account is opened for each transaction entered into by a business firm. 2. The recording process becomes more efficient and informative if all transactions are recorded in one account. 3. When the volume of transactions is large, recording them in tabular form is more efficient than using journals and lodgers. 4. An account is often referred to as a T-account because of the way it is constructed. 5. A debit to an account indicates an'increase in that account. 6. Ila revenue account is credited, the revenue account is increased. 7. The normal balance of all accounts is a debit. Debit and credit can be interpreted to mean increase and decrease, respectively. 9. The double entry system of accounting refers to the placement of a double line at the end of a column of figures. A credit balance in a liability account indicates that an error in recording has occurred. The drawing account is a subdivision of the owner's capital account and appears as an expense on the income statement. 12. Revenues are a subdivision of owner's capital. 13. Under the double-entry system, revenues must always equal expenses. 14. Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts. 15. Business documents can provide evidence that a transaction has occurred. 16. Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a joumal. 17. Transactions are entered in the ledger accounts and then transferred to journals. 18. All business transactions must be entered first in the general ledger. 19. A simple journal entry requires only one debit to an account and one credit to an account. 20. A compound journal entry requires several debits to one account and several credits to one account. 10. 11