Chapter 3: True or False?

Question 1

Revenues are decreased by credits.

Answer 1

False.

Question 2

Debits must always equal Credits.

Answer 2

True.

Question 3

Journals contain entries affecting all types of accounts.

Answer 3

True.

Question 4

A larger company often has more accounts than a smaller one.

Answer 4

True.

Question 5

Common Stock is classified in ‘Stockholders’ Equity’.

Answer 5

True.

Question 5

Journal entries are transferred to the (usually general) ledger.

Answer 5

True.

Question 5

Unearned Service Revenue is classified as a ‘Revenue’.

Answer 5

False. It is a liability.

Question 6

A source document is NOT a type of transaction.

Answer 6

False, it is a source!!

Question 7

Debits are on the left side.

Answer 7

True.

Question 8

Dividends are an expense.

Answer 8

False. (classifies as stockholders’ equity b/c it’s not included in calculating our net income).

Question 8

The Accounting Cycle has 9 steps.

Answer 8

True.

Question 8

The normal balance side is where increases in the account are recorded.

Answer 8

True.