Accounting is the information system that identifies records and communicates the economic events of an organization to interested users. True False

Bookkeeping deals with the record-keeping process and is only one aspect of accounting. True False

Internal users are those who manage the business. True False

The Financial Accounting Standards Board is a private organization that establishes broad reporting guidelines of general applicability as well as specific accounting rules. True False

Certified Public Accountants are only permitted to prepare audit reports and tax returns. True False

The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owners and all other economic entities. True False

Collection of account receivable will increase both cash and accounts receivable. True False

An expense paid with cash would result in an equal decrease in liabilities and owners equity. True False

Liabilities represent the owner ship claim on total assets. True False

Net Income is the excess of revenues over expenses for the accounting period. True False

Assets are increased by debits and liabilities are decreased by credits. True False

The owners capital account is increased by credits True False

An account will have a credit balance if the total debit amounts exceed the total credit amounts. True False

The ledger is the entire group of accounts and is referred to as the book of original entry. True False

The basic steps in the recording process are (1) to analyze each transaction, (2) to enter the transaction in a journal, and (3) to transfer the journal entry to the appropriate ledger accounts. True False

The procedure of transferring journal entries to the ledger accounts is called posting and should be performed in chronological order. True False

Assets = Liabilities + owners capital - owners drawing + revenues expenses is a correct form of the expanded basic accounting equation. True False

In posting, one should enter J2 in the post ref. column on page two of the journal. True False

When the columns of the trial balance equal each other, it proves no errors occurred in recording and posting. True False

The double entry system is possible because all business transactions may be expressed in equal debit and credit entries. True False

All of the following are external users of accounting information except

labor unions

taxing authorities

regulatory agencies

company officers

Recording consists of:

identifying and measuring economic events

preparing and disturbing accounting reports

Keeping a systematic, chronological diary of events measured in dollars and cents.

Identifying measuring, receiving, and communicating economic events to interested users.

Accounting for government, foundations, hospitals, labor unions, colleges/universities, and charities is part of which broad category within the accounting profession?

Not-for-profit accounting

Management accounting

Public accounting

Cost accounting

Which of the following is not an acceptable statement of basic accounting equation?

Assets - Liabilities = Owners equity

Assets = Liabilities Owners equity

Assets = Liabilities + Owners equity

Assets- Owners equity = Liabilities

The financial statement that summarizes information about the cash inflows and outflows during a period is the

income statement

statement of retained earnings

balance sheet

statement of cash flows

Transactions are initially recorded in the

general ledger

general journal

trial balance

balance sheet

The rights side of an account is referred to as the

footing

chart side

debit side

credit side

A purchase of office equipment for cash requires a credit to

office equipment

cash

accounts payable

owners equity

The equality of the accounting equation can be proven by preparing a

trial balance

journal

general ledger

T-account

Which of the following accounts would be increased with a debit?

rent payable

owners capital

service revenue

owners drawing