Chapter 2 ANALYZING AND RECORDING TRANSACTIONSTrue /False Questions1.The first step in the processing of a transaction is to analyze the transaction and source documents.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C1Topic: Processing Transactions2.Preparation of a trial balance is the first step in the analyzing and recording process.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C1Topic: Processing Transactions3.Source documents provide evidence of business transactions and are the basis for accounting entries.Answer: TrueBlooms: Remember AACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C1Topic: Processing Transactions4.Items such as sales tickets, bank statements, checks, and purchase orders are source documents.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C1Topic: Processing Transactions5.An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Accounts6.A customers promise to pay is called an account payable to the seller.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Accounts7.Withdrawals by the owner are a business expense.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Accounts8.Land and buildings are generally recorded in the same ledger account.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Accounts9.Unearned revenues are liabilities.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Accounts10.Cash withdrawn by the owner of a proprietorship should be treated as an expense of the business.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 Easy Learning Objective: 02-C2Topic: Accounts11.When a company provides services for which cash will not be received until some future date, the company should record the amount charged as unearned revenue.Answer: FalseBlooms: Understand AACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty:2 Medium Learning Objective: 02-C2Topic: Accounts12.The chart of accounts is a list of all the accounts used by a company and includes an identification number assigned to each account.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C3Topic: Ledger and Chart of Accounts13.An account balance is the difference between the debits and credits for an account including any beginning balance.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C2Topic: Account14.Debit means the right side of an account.Answer: FalseBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C4Topic: Debits and Credits15.In a double-entry accounting system, the total amount debited must always equal the total amount credited.Answer: TrueBlooms: RememberAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 1 EasyLearning Objective: 02-C4Topic: Debits and Credits16.Increases in liability accounts are recorded as debits.Answer: FalseBlooms: UnderstandAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 2 MediumLearning Objective: 02-C4Topic: Debits and Credits17.Debits increase asset and expense accounts.Answer: TrueBlooms: UnderstandAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 2 MediumLearning Objective: 02-C4Topic: Debits and Credits18.Credits always increase account balances.Answer: FalseBlooms: UnderstandAACSB: CommunicationAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: 2 MediumLearning Objective: 02-C4Topic: Debits and Credits19.Crediting an expense account decreases it.Answer: TrueBlo