True/False Questions:

____ 1. An income statement is a summary of the revenues and expenses of a business as of a specific date.

____ 2. If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

____ 3. Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue.

____ 4. The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

____ 5. Omitting a required adjusting entry at the end of a reporting period will cause the net income/net loss on the income statement to be misstated.

____ 6. The chart of accounts should be the same for each business.

____ 7. An unearned revenue is a liability.

____ 8. The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

____ 9. A company does not realize that the last two day's revenue for the month was not recorded. The adjusting entry on December 31 is to debit Accounts Receivable and to credit Fees Earned.

____ 10. If total assets increased by $175,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total owner's equity was a $185,000 increase