True Or false

31. Purchasing supplies on credit increases assets while decreasing liabilities.

32. Prepaid Insurance is an expense account which is used for recording expenses that have been paid in advance.

33. A credit purchase of a business expense item should be recorded with a debit to an expense account and a credit to Accounts Payable.

34. If a company purchases land, paying part with cash and issuing a note payable for the balance, the journal entry to record this transaction will include a debit to Cash.

35. If a company sells products and receives from the customer a formal written promise to pay a definite sum of money on demand or on a defined future date (or dates), the seller should debit the promised amount to Accounts Receivable.

36. A transaction that decreases an asset account and increases a liability account must also affect another account.

37. When a business sends a bill for $200 to a customer for services rendered, the journal entry to record this transaction will include a $200 credit to Accounts Receivable.

38. A transaction that increases an asset account and decreases a liability account must also affect another account.

39. Step Two of the accounting cycle requires that we record transactions in a record called a journal.

40. A compound journal entry usually affects three or more accounts.