True or false

____1.The double-entry system is a logical method for recording transactions and results

in equal debits and credits for each transaction.

____2.The normal balance of an expense is a credit.

____3.The journal provides a chronological record of transactions.

____4.The chart of accounts is a listing of the accounts and the account numbers which

identify their location in the ledger.

____5.The matching principle requires that expenses be matched with revenues.

____6.The Accumulated Depreciation account is a contra asset account that is reported

on the balance sheet.

____7.Accrued revenues are amounts recorded and received but not yet earned.

____8.After a work sheet has been completed, the statement columns contain all data

that are required for the preparation of financial statements.

____9.To close net income to owners capital, Income Summary is debited and Owners

Capital is credited.

____10.In closing, Owners Drawing is credited and Income Summary is debited.

____11.The post-closing trial balance will contain only owners equity statement accounts

and balance sheet accounts.

____12.Under a perpetual inventory system, the cost of goods sold is determined each

time a sale occurs.

____13.Freight terms of FOB destination means that the seller pays the freight costs.

____14.Sales Allowances and Sales Discounts are both designed to encourage customers

to pay their accounts promptly.

____15.The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid

within the first 10 days of the next month.

____16.Goods that have been purchased FOB destination but are in transit, should be

excluded from a physical count of goods.

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____17.Goods out on consignment should be included in the inventory of the consignor.

____18.The First-in, First-out (FIFO) inventory method results in an ending inventory

valued at the most recent cost.

____19.Use of the LIFO inventory valuation method enables a company to report paper or

phantom profits.

____20.A subsidiary ledger is a group of control accounts which provides information to

the managers for controlling the operation of the company.

____21.An accounts receivable subsidiary ledger has all the detailed information about

the cash sales to individual customers.

____22.Control accounts are always located in the general ledger.

____23.A subsidiary ledger provides up-to-date information on specific account balances.

____24.The safeguarding of assets is an objective of a companys system of internal

control.

____25.Only large companies need to be concerned with a system of internal control.

____26.The petty cash fund eliminates the need for a bank checking account.

____27.Checks from customers who pay their accounts promptly are called outstanding

checks.

____28.All plant assets (fixed assets) must be depreciated for accounting purposes.

____29.The book value of a plant asset is always equal to its fair market value.

____30.Under the double-declining-balance method, the depreciation rate used each year

remains constant.

____31.The IRS does not require the taxpayer to use the same depreciation method on the

tax return that is used in preparing financial statements.