AZFBLA1_ai - ACCOUNTING I True/False Indicate whether the...

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ACCOUNTING I True/False Indicate whether the sentence or statement is true or false. ____ 1. The cash account is used to summarize information about the amount of money the business has available. ____ 2. The source document used when supplies bought on account are paid for is a check. ____ 3. A journal shows in one place all the changes in a single account. ____ 4. When a business uses EFT to pay vendors, previous arrangements have been made with its bank to process the transactions. ____ 5. Many businesses choose a one-year fiscal period that ends during a period of high business activity. ____ 6. A double line ruled across both Trial Balance columns shows that the two columns are to be totaled. ____ 7. Double lines are ruled across the balance sheet columns to show that the column totals have been verified as correct. ____ 8. The source document for a cash purchase is a memorandum describing the merchandise purchased. ____ 9. The purchase invoice number assigned by the vendor should be used as the source document number in the journal entry. ____ 10. A cash payment on account transaction increases the accounts payable account balance and decreases the cash account balance. ____ 11. Purchases and sales of merchandise are the two major activities of a merchandising business. ____ 12. Sales tax is a tax on sale of merchandise or services. ____ 13. Accounts Payable is a single general ledger account that summarizes the total amount owed to all vendors. ____ 14. The first task in preparing a payroll is to determine the number of days worked by each employee. ____ 15. For purposes of adjustments, Insurance Premiums Payable is the related temporary account for Prepaid Insurance. ____ 16. The data for the revenue section of the income statement are obtained from the work sheet's Income Statement Credit column. ____ 17. A purchases journal is used for cash purchases only.
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____ 18. Each amount in the Accounts Payable Debit column of a cash payments journal is posted individually to the general ledger account Accounts Payable. ____ 19. When cash is received for a sale on account within the discount period, the amount credited to Accounts Receivable is reduced by the amount of discount. ____ 20. International sales are not a very important source of revenue for businesses throughout the world. ____ 21. To assure an accurate and complete count, a business will often be closed during the periodic inventory. ____ 22. Corporations with less than $50,000 net income pay taxes at lower tax rates than corporations with larger net incomes. ____ 23. A corporation balance sheet reports assets, liabilities, and stockholders' equity during a fiscal period. ____ 24. Prepaid Insurance is classified as a current liability. ____ 25.
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This note was uploaded on 10/14/2011 for the course ACCT 2101 taught by Professor Clark during the Fall '10 term at Georgia State University, Atlanta.

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AZFBLA1_ai - ACCOUNTING I True/False Indicate whether the...

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