A" for True for False 1. Unearned Revenue is an asset reported on the Balance Sheet is increased by a credit and reported on the Balance Sheet 3. Cash is an asset account that is increased by a debit. a business pays cash for an asset, total assets will decrease. a business purchases an asset on credit, total assets and total liabilities will increase. 5. When 6. Common 7. Stock and Treasury Stock are both reported as assets on the Balance Sheet. Treasury stock is reported on the Balance Sheet and the 8. 9. Statement of Retained Earnings. W age Expense and Wages Payable are both reported on the Income Statement. Prepaid Rent and Prepaid Insurance are expense accounts. 10. Under 11. Land, Office Supplies, and Merchandise I 12. When a company accrues an expense, overall, stockholder's equity and total liabilities will increase. 13. Accumulated Depreciation represents funds (money) set aside to buy new assets. 14. Salvage value is the estimate of the asset's value at the end of its useful life. 15. Cost of Goods Sold is increased by a debit and reported on the Income Statement 16. The maximum depreciation that can be taken on an asset is equal to cost minus salvage value. accrual basis accounting, revenues are only recognized when cash is received. Inventory are asset accounts. 17. Merchandise Inventory is increased by Purchase Returns and goods sold to customers 18. The number of common shares issued is always the same as the number of common shares outst 19. The maturity value of a $100,000, 6-month note, with a stated rate of 12% would be $106,000 20. The Statement of Cash Flows begins with the Operating Activities