True/False questions

____ 1. Adjusting entries affect only expense and asset accounts.

____ 2. During inflationary periods, the use of the LIFO method of costing inventory will result in a greater amount of net income than would result from the use of the FIFO method.

____ 3. The amount representing the difference between Accounts Receivable and its contra asset account is known as the net realizable value.

____ 4. The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.

____ 5. When using a perpetual inventory system, anytime a customer returns a prior sale, the Merchandise Inventory account will need to be increased for the returned goods.

____ 6. When an account receivable that has been written-off is then subsequently collected, the account receivable needs to be reinstated.

____ 7. If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have exceeded cash overages for the period.

____ 8. Receivables not currently collectible (within the next 12 months) are reported in the Investments section of the balance sheet.

____ 9. In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.

____ 10. If net income for a business was $175,000, withdrawals were $40,000 in cash, and the owner made no investment, the owner's equity increased $215,000.