True and False:

1. The basic accounting equation states that Assets = Liabilities.

2.Transactions that can be measured in dollars and cents are recorded in the financial information system.

3.Transactions are entered in the ledger accounts and then transferred to journals.

4. A simple journal entry requires only one debit to an account and one credit to an account.

5. The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

6. Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

7.If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.

8.After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

9.Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

10.Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

11.The first-in, first-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

12.If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.

13.The accounts payable subsidiary ledger provides detailed information about amounts owed to creditors.

14. Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger at the end of an accounting period.

15.Internal control is most effective when several people are responsible for a given task.

16.All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.

17.Both accounts receivable and notes receivable represent claims that are expected to be collected in cash.

18. Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible.

19. Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

20.Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

21.A contingent liability is a liability that may occur if some future event takes place.

22. FICA taxes are a deduction from employee earnings and are also imposed upon employers as an expense.

23. If salary allowances and interest on capital are stipulated in the partnership profit and loss sharing agreement, they are implemented only if income is sufficient to cover the amounts required by these features.

24.Partnership creditors may have a claim on the personal assets of any of the partners if the partnership assets are not sufficient to settle claims.