1. The general journal is a book or file that contains all of a business's accounts and balances.

True

False

2. A debit is a number entered on the right side of an account and a credit is a number entered on the left side of an account.

True

False

3. A chart of accounts is a listing of all the accounts contained in the General Ledger.

True

False

4. A journal is a record in which transactions are initially recorded (recorded first).

True

False

5. A transaction that requires more than one debit and/or more than one credit is called a compound journal entry.

True

False

6. Posting is the process of transferring the balances from the Journals to the General Ledger.

True

False

7. An account is a record that contains the summarized information about the various types of assets, liabilities, equity, revenues, and expenses.

True

False

8. The formal financial statement that represents the basic accounting equation Assets = Liabilities + Owner's Equity is called the Income Statement.

True

False

9. A sole proprietorship is considered a separate legal entity.

True

False

10. The periodic inventory system requires a physical count in order to determine the Cost of Goods Sold and the Ending Inventory values.

True

False

11. If the terms of an order are FOB Shipping Point, the title to the goods pass to the buyer when the goods leave the seller's facility.

True

False

12. A jewelry store would more than likely use a perpetual inventory system.

True

False

13. When preparing a bank reconciliation, a deposit in transit is added to the book balance.

True

False

14. When preparing a bank reconciliation, the outstanding checks are deducted from the bank balance.

True

False

15. The income statement is the formal financial statement used to report the profitability of a business.

True

False

16. An example of a good internal control is having the same individual responsible for receiving and recording the cash.

True

False

17. The income statement is used to analyze the liquidity and debt paying ability of a business.

True

False

18. Cash, Accounts Receivable, Certicates of Deposit, and Inventory are all examples of short term liquid assets.

True

False

19. The inventory costs assigned to the unsold and on hand units is called Cost Of Goods Sold.

True

False

20. The cost of inventory is deducted on the income statement when the goods are purchased.

True

False