Question

True False 15 (10 @1.5) 1. Revenues, expense dividend are all increases with credit. 2. Dividends are subtracted as expenses in the calculation of net income. 3. A balance sheet covers activities over a period of time such as a month or year. 4. A transaction that credits an asset account and credits a liability account must also affect one or more other accounts. 5. A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction. 6. The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits. 7. The heading on every financial statement lists the three W's Who (the name of the business); What (the name of the statement); and Where (the organization's address). 8. The accrual basis of accounting recognizes revenues when cash is received from customers, regardless of when the goods or services are provided. 9. Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period. 10. The Financial Accounting Standards Board (FASB) is a group tasked with setting generally accepted accounting principles (GAAP).

Answer 1

1. FALSE

Only revenue increase with credit. Expenses and dividends increase with debit.

2. FALSE

Dividends are not expenses.

3. TRUE

4. TRUE

Transaction should have other accounts also which will be debited.

5 TRUE

6. FALSE

Trial balance is not replacement of balance sheet. Trial balance just shows the arithematical accuracy of accounts. Balance sheet shows financial position of the business at a particular point of time.

7. TRUE

8. FALSE

Accrual basis of accounting recognizes revenues when it is earned regardless of when it is received.

9. TRUE

Accrued expenses are the expenses of current period that are not yet paid. They will be paid in future period.

10. TRUE