Question

U per Problem 7 Decide whether each of the following statements is true or false, 1. Balance sheet accounts are the revenue and expense accounts 2. Land is a depreciable fixed asset in the hospitality industry 1. If a guest tab shows food at $40 and sales tax of $2.40, the amount recorded as a sale will be $42.40 4. If a guest orders a $2,000 banquet and pays $2,000 on the banquet to be scheduled net month, a sale of $2,000 is recorded. 5. Storeroom purchases under a periodic inventory system are recorded to an Inventory account 0. Direct purchases under a periodic inventory system are recorded to a Cost of Sales account 7. Accumulated Depreciation is an expense account. guest tab shows food at $80 and sales tax of $4.80; the guest pays with an in-house credit card. The $80 amount cannot be t 9. Food used is the same as cost of food sold. 10. The income statement ac ities + Equity ement accounts do not affect the accounting equation: Assets = Liabil-

Answer 1

1. FALSE A Balance Sheet show financial position of an entity. It discloses Assets, Liabilities and Stockholders' Equity. 2. FALSE Land is not a depreciable Asset. It value will not depreciated over its life. So no depreciation needed for Land. 3. FALSE Sales Tax is amount payable to the Government. So it is not form part of sales. Sales shall be accounted for only $40. 4. FALSE Any amount received for service to be provided or delivery to be made for product in future periods, then that amount shall be considered as advance and recorded as Unearned Revenue because revenue not earned at the time of receipt of cash. 5. FALSE Under Periodic inventory System, purchases shall be accounted as debiting Purchases account not inventory account.