The audit that's performod on a company's financial statements prior to sending your

financial statements to the SEC $($Securities and Exchange Commission$)$ is performed by

the company's internal management team to ensure that the financial statements are

prepared correctly.

A$.$ True

B$.$ False

Internal controls are put in place to help reduce fraud risk and error.

A$.$ True

B$.$ False

Under the accrual basis of accounting, revenue is recorded as it is earned and expenses

are recognized as incurred. Expenses incurred to generate revenues are recognized in the

same period that the revenue is recorded.

A$.$ True

B$.$ False

If a company forgets to book depreciation related to an asset this would cause assets and

net income to be understated.

A$.$ True

B$.$ Faise

Lindsay Company purchased $$16,000$ of merchandise and paid $$1,400$ in shipping costs.

The cost of the shipping Lindsay paid for should be included in the inventory balance.

A$.$ True

B$.$ False

The cost of repairing a broken part on a machine should be capitalized and included as an

asset on the balance sheet to be depreciated over its useful life instead of expensed

immediately.

A$.$ True

B$.$ False

A company had office supplies of $$4,200$ to start the year and purchased $$3,000$ worth of

office supplies during the year. At the end of the year, the company did an inventory

count and there was $$2,000$ worth of supplies remaining. The company would need to

record an adjusting joumal entry to record $$5,200$ of supplies expense and a $$5,200$

decrease in the supplies balance.

A$.$ True

B$.$ False

The amount of net income a company earns during the year is calculated on the Balance

Sheet.

A$.$ True

B$.$ False