Question

True or False

32) A transaction that causes an increase in an asset may also cause a decrease in another asset, an increase in a liability, or an increase in owners' equity. 33) Window dressing occurs when management attempts to make a company look financially stronger than it actually is. 34) The sale of additional shares of capital stock will cause retained earnings to increase 35) Every business transaction is recorded by a debit to a balance sheet account and a credit to an income statement account. 36) The matching principle refers to the relationship between revenues and expenses. 37) Revenues increase owners' equity and are, therefore, recorded by crediting the revenues account. 38) Omission of the adjusting entry needed to accrue an expense at the end of the period would cause liabilities to be understated. 39) The balance in the Retained Earnings account that appears on the adjusted trial balance is the same as the balance of the Retained Earnings account that is reported on the balance sheet. 40) Publicly owned companies must file their audited financial statements and detailed supporting schedules with the Financial Accounting Standards Board. 41) The net income percentage can be measured by dividing net income by total assets. 42) Investors are individuals and other enterprises that have provided equity to the reporting enterprise. 43) In a business organized as a corporation, it is not necessary to list the equity of each stockholder on the balance sheet. 44) The ledger is a chronological, day-by-day, record of business transactions. 45) Unearned revenue is a liability and should be reported on the income statement. 46) Return on equity is a commonly used measure of a company's profitability 47) Public accounting is the segment of the profession where professionals offer audit. tax, and consulting services to clients.

Answer 1

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		Reason
32	True.	Suppose cash is paid to buy other assets. Then one asset will increase and other asset will decrease. Cash is paid for salary payable. Asset and liabilities both will reduce. Sales are made in cash. Then asset will increase and revenue will increase so owner's equity will increase.
33	True.
34	False.	Retained earnings are only impacted by net income and dividends.
35	False.	Business transaction may impact only balance sheet accounts like cash paid purchase of equipment or other asset or settlement of any liability.
36	True.
37	True.
38	True.
39	False.	Retained earnings in adjusted trial balance is the opening balance. Retained earnings in the balance sheet comes from statement of retained earnings made after preparing adjusted Trial Balance.
40	True.
41	False.	Net income percentage is calculated as net income divided by net sales.
42	True.
43	True.
44	True.
45	False.	Unearned revenue is shown as liability in the balance sheet.
46	True.
47	True.