Test Bank For Intermediate Accounting 9th Edition By Spiceland
Chapter 02 Review of the Accounting Process Answer Key True / False Questions
1. Owners’ equity can be expressed as assets minus liabilities.
TRUE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.
Level of Difficulty: 1 Easy
Topic Area: Accounting equation
2. Debits increase asset accounts and decrease liability accounts.
TRUE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.
Level of Difficulty: 1 Easy
Topic Area: Account relationships and records
3. Balance sheet accounts are referred to as temporary accounts because their balances are always changing.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation
2-1
Blooms: Remember
Learning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.
Level of Difficulty: 1 Easy
Topic Area: Account relationships and records
4. After an unadjusted trial balance is prepared, the next step in the accounting processing cycle is
the preparation of financial statements.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.
Level of Difficulty: 1 Easy
Topic Area: Accounting processing cycle steps
5. Adjusting journal entries are recorded at the end of any period when financial statements are prepared.
TRUE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-04 Identify and describe the different types of adjusting journal entries. Level of Difficulty: 1 Easy
Topic Area: Analyze updating-Record adjusting entry
6. Accruals occur when the cash flow precedes either revenue or expense recognition.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-04 Identify and describe the different types of adjusting journal entries.
2-2
Level of Difficulty: 1 Easy
Topic Area: Analyze the updating-Identify type of adjustment
7. The adjusted trial balance contains only permanent accounts.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-05 Record adjusting journal entries in general journal format; post entries; and prepare an adjusted trial balance.
Level of Difficulty: 1 Easy
Topic Area: Trial balance―Adjusted
8. The income statement summarizes the operating activity of a firm at a particular point in time.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking
AICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 Easy
Topic Area: Financial statement―Income Statement
9. The balance sheet can be considered a change or flow statement.
FALSE
AACSB: Reflective Thinking AICPA: BB Critical Thinking
AICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 Easy
Topic Area: Financial statement―Balance sheet
2-3
10. The statement of cash flows summarizes transactions that caused cash to change during a reporting period.
TRUE
AACSB: Reflective Thinking AICPA: BB Critical Thinking
AICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: Remember
Learning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 Easy
Topic Area: Financial statement―Cash flow
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