Acct 110 Chapter 5 Homework Handout True/False Statements Instructions: Each of the following statements is true or false. Indicate your choice by writing "T" for true or "F" for false in the column to the right of the statement. I or F? 1 The matching principle says that expenses should be recorded in the period in which related revenues are earned. 2 If a 6-month insurance policy is purchased on July 1, it's recorded with a debit to Insurance Expense 3 If a trial balance (before adjustments) shows Supplies has a balance of $600, but there's $575 worth of supplies left, an adjustment is needed. 4 A worksheet is a formal financial statement. 5 Historical cost is the amount of depreciation expense recorded for each accounting period. 6 A contra-asset is deducted from the related asset on the balance sheet. 7 The balance in the Accumulated Depreciation account decreases each year. 8 A statement of owner's equity is a statement summarizing all of the changes in owner's equity during a specified period of time. 9 Financial statements can be prepared from the balances on an adjusted trial balance. 10 The book value of a depreciable long-term asset decreases each year