Accounting 26th Edition Warren Test Bank

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Accounting 26th Edition Warren Test Bank

CHAPTER 2: ANALYZING TRANSACTIONS
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. Accounts are records of increases and decreases in individual financial statement items.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 – Purpose
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
2. A chart of accounts is a listing of accounts that make up the journal.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 – Purpose
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
3. The chart of accounts should be the same for each business.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.03 – Business Forms
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4. Accounts payable are accounts that you expect will be paid to you.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
5. Consuming goods and services in the process of generating revenues results in expenses.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
6. Prepaid expenses are an example of an expense.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. The Unearned Revenues account is an example of a liability.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
8. The Drawings account is an example of an expense.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
9. Accounts in the ledger are usually maintained in alphabetical order.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10. Depending on the account title, the right side of the account is referred to as the credit side.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
11. To determine the balance in an account, always subtract credits from debits.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
12. An account in its simplest form has three parts to it: a title, an increase side, and a decrease side.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13. The T account got its name because it resembles the letter “T.”
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
14. The right hand side of a T account is known as a debit and the left hand side is known as a credit.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
15. Debiting the cash account will increase the account.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16. A credit to the cash account will increase the account.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
17. The cash account will always be debited.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
18. The recording of cash receipts to the cash account will be done by debiting the account.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19. The recording of cash payments from the cash account is done by entering the amount as a credit.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
20. The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding
the amounts together.
a. True
b. False
ANSWER: False
DIFFICULTY: Challenging
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
21. Liabilities are debts owed by the business entity.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.03 – Business Forms
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
22. The accounts payable account is listed in the chart of accounts as an asset.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.16 – Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
23. A drawing account represents the amount of withdrawals made by the owner.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.03 – Business Forms
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
24. Revenues are equal to the difference between cash receipts and cash payments.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25. Expenses result from using up assets or consuming services in the process of generating revenues.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
26. Owner’s equity will be reduced by the amount in the drawing account.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.03 – Business Forms
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
27. When an owner invests assets in the business, the capital account increases due to revenue being earned.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCT.WARD.16.02-02 – 02-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
Chapter 2: Analyzing Transactions
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
28. When an account receivable is collected in cash, the total assets of the business increase.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCT.WARD.16.02-02 – 02-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.15 – Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
29. When an account payable is paid with cash, the owner’s equity in the business decreases.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-01 – 02-01
ACCT.WARD.16.02-02 – 02-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.16 – Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
30. For a month’s transactions for a typical medium-sized business, the salary expense account is likely to have
only credit entries.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.02-02 – 02-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic