Accounting True or False Questions

1.The periodic inventory system relies on a physical count of merchandise to determine the end of period balance sheet amount.

Question 1 options:

	1) True
	2) False

2.Sales Returns and Allowances is described as a contra-revenue account.

Question 2 options:

	1) True
	2) False

3. Under the perpetual inventory system, the ending merchandise inventory balance is closed at the same time as Cost of Goods Sold.

Question 3 options:

	1) True
	2) False

4. For accounting information to be useful, it must be both relevant and reliable

Question 10 options:

	1) True
	2) False

5. Full disclosure of all important facts aids in overcoming the limitations of accounting reports

Question 11 options:

	1) True
	2) False

6. Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting periodQuestion 12 options:

	1) True
	2) False

7. It is the responsibility of management to insist upon honest financial reporting.Question 13 options:

	1) True
	2) False

8. The intentional preparation of misleading financial statements is referred to asfraudulent financial reporting.Question 14 options:

	1) True
	2) False

9. Cost of goods sold and selling expenses would appear in the same section of a single-step income statement.Question 15 options:

	1) True
	2) False

10. Asset turnover measures how efficiently assets are used to produce sales.Question 16 options:

	1) True
	2) False

11. A company with a current ratio of 1.0 is considered more liquid than one with a current ratio of 2.0.Question 17 options:

	1) True
	2) False

12. A company with a low debt to equity ratio is in a more vulnerable position during poor economic times than a company with a high debt to equity ratio.Question 18 options:

	1) True
	2) False

13. An effective system of internal control centralizes functions in a single, capable individual.Question 25 options:

	1) True
	2) False

14. The separation of duties is easier to accomplish in small companies than in large ones.Question 26 options:

	1) True
	2) False

15. Interest earned on a checking account discovered during the bank reconciliation process should be added to the balance per books to get an adjusted book balance.Question 31 options:

	1) True
	2) False

16. Upon completing a bank reconciliation, one would prepare a journal entry to correct the outstanding checks identified.Question 32 options:

	1) True
	2) False

17. Because bad debt losses are incurred to generate sales, they should be charged against the sales that they helped generate.Question 35 options:

	1) True
	2) False

18. Bad-debt losses are a cost of selling on creditQuestion 36 options:

	1) True
	2) False

19. The allowance method of handling bad debts violates the matching principle.Question 37 options:

	1) True
	2) False

20. Allowance for Uncollectible Accounts is a contra-asset account.Question 38 options:

	1) True
	2) False

21.Under the accounts receivable aging method, the balance in Allowance for Uncollectible Accounts must be in considered prior to adjusting for estimated uncollectible accounts.Question 39 options:

	1) True
	2) False

22. The direct write-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.Question 40 options:

	1) True
	2) False