Indicate whether each of the following statements is true (T) or false (F)

1.The double-entry system requires that the total dollar amount of debits equal the total dollar amount of credits in a single journal entry and in the general ledger as a whole.

2.When a bond is issued at a premium or discount, total interest expense will include the cash-based interest and also reflects the impact of the amortization of the premium or discount.

3.When total liabilities decrease but total assets remain unchanged as a result of a transaction, an equity account must increase.

4.Treasury Stock represents shares that have been repurchased by a company and such shares are considered to be issued but not outstanding.

5.When a company declares and pays a cash dividend, the payment is equally distributed among common and preferred shareholders.

6.An NSF check would be subtracted from the unadjusted book balance to determine the true cash balance.

7.A deposit in transit would be added to the unadjusted book balance to determine the true cash balance.

8.A debit memo issued by a bank to a company requires the company to record an adjustment which results in an increase to its cash balance.

9.To maximize efficiency and to reduce costs, the same person may perform all of the following functions: authorization of transactions, recording of transactions, and custody of the associated assets.

10.Under proper internal controls, those who are given authority should bear the corresponding responsibility.

11.Under proper internal controls, the person who prepares weekly payroll checks should not be able to authorize a pay increase for an employee.

12.A fundamental internal control is to disallow employees to take vacation time off and to disallow job rotation.

13A fidelity bond is a form of insurance that companies buy to protect the company from loss due to employee dishonesty.

Answer rating: 100% (QA)

1 False In a doubleentry system every dollar amount of debit is equal to every dollar amount of cred... View the full answer