Section 1 True or False Please indicate TRUE or FALSE at the end of the statement. 1. The first step in the accounting cycle is transaction analysis. (40 marks) 2. An account is a detailed record of increases and decreases in a specific asset, liability or equity item. 3. A ledger is a type of account. 4. Goods sold on credit to customers are called accounts payable. 5. As prepaid assets are used up, the costs of the assets become expenses. 6. Withdrawals are a type of transaction that affects equity. 7. A building is an example of an asset that does not provide any benefit to its owner. 8. To make it easier for the bookkeeper, the cost of land is separated from the cost of buildings located on the land. 9. Unearned revenues are assets, because a service or product is owed to the customer. 10. Cash withdrawn by the owner of an unincorporated business in the form of a monthly salary should be treated as an expense of the business. 11. When a company sells services for which cash will not be received until some future date, the company should credit an unearned revenues account for the amount charged to the customer. 12. A T-Account is a formal account frequently used in business. 13. An account balance is the difference between the increases and decreases recorded in an account. 14. The left side of a T-account is always the credit side, while the right side is always the debit side. 15. The accounting equation is expressed as assets-liabilities-equity. 16. The accounting equation can be expressed as liabilities - assets - equity. 17. In a double-entry accounting system, total debits must always equal total credits. 18. Double-entry accounting means that every transaction affects and is recorded in at least two accounts. 19. Debits increase asset and expense accounts. 20. Credits to accounts are always increases. 2