03 - SOLUTION Problem 3-2

03 - SOLUTION Problem 3-2 - decrease an asset account to...

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Problem 3-2 Solution – True / False Questions for Chapter 3 T rue or F alse F 1. The Retained Earnings account is an asset account similar to the Inventory account. T 2. The Retained Earnings account is similar to the Common Stock account, in that they are both owners’ claim-to-assets accounts. T 3. The Retained Earnings account tracks the owners’ claim to assets that result from the operation of the business. F 4. The Retained Earnings account is increased by a debit and decreased by a credit. F 5. When a transaction increases a company’s accounts receivable the Retained Earnings account must be decreased to keep the accounting system in balance. F 6. A transaction which decreases the Retained Earnings account must always
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Unformatted text preview: decrease an asset account to keep the accounting system in balance. F 7. The Common Stock account tracks the owners claim to assets that result from the operation of the business. F 8. The collection of cash from a customer will always result in an increase in the Retained Earnings account. T 9. The payment of wages to employees for work they performed during the current accounting period will result in a reduction of Retained Earnings. F 10. The Common Stock account is decreased by a debit; while the Retained Earnings account is increased by a debit....
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This note was uploaded on 12/17/2010 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas at Austin.

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