CHAPTER 4 Flashcards
Types of Major Accounts (TRUE OR FALSE)
Chart of accounts is the basic storage of information in accounting.
False
Debit means the lest side of an account, whole credit means the right.
True
The difference between the total debits and total credits in an account represents the balance of that account.
True
An account has total debits of Php80 and total credits of Php20. This account has a balance of Php60.
True
The balance of the account in #4 above is referred to as a credit balance.
False
If the total debits in an account exceed the total credits, the account would have a debit balance.
True
There are five major types of accounts used in accounting.
True
Income and expenses are the balance sheet accounts.
False
The “used up” portion of a prepayment (e.g., prepaid rent) is an expense, while the “unused” portion is an asset.
True
The “used up” portion of supplies bought during the period is called “Prepaid supplies.”
False
The right side of an account is called credit.
True
Accounts payable and accounts receivable are opposites, meaning if I have an account payable to you, you, in turn, have an account receivable from me.
True
You are selling banana cue. If I buy your banana cue and informally promise to pay for it tomorrow, your ‘accounts payable’ will increase.
False
In conjuction with #13 above, my ‘accounts receivable’ will increase.
False
If after sometime, I haven’t paid yet my dues to you in #13 above, and you don’t expect that I can pay you, you will recognize an expense called bad debt expense.
True
An entity that borrows money from the bank would most likely present interest income in its income statement.
False
The terms “receivable” and “prepaid” connote an asset, while the terms “payable” and “unearned” connote a liability.
True
Collectively, land, building and equipment are referred to as “Property, plant and equipment.
True
Gains are income that arises in the ordinary course of business activities.
False
Mr. Monkey’s main business activity involves selling bananas. One time, Mr. Monkey sold an iPhone with carrying amount of PHp17 for Php20. Mr. Monkey recognizes a gain of Php3 on this transaction rather than revenue.
True
