CHAPTER 5 Flashcards
Books of Accounts and Double-entry System (TRUE OR FALSE)
The three books of accounts are the journal, ledger and T-account.
False
The ledger is called the “books of original entries.”
False
Journals can be classified into General Journal and Special Journal. Special journals are used to record transactions of a similar nature. Those that cannot be recorded in the special journals are recorded in the general journal.
True
Entity A has total accounts receivable of Php12M. This information is most likely to have been taken from the General Journal.
True
Of Entity A’s total accounts receivable of Php12M, Php4.8M is due from Entity B. This information is most likely to have been taken from the Special Journal.
False
An account that necessarily needs a breakdown is called a controlling account.
True
The normal balance of an asset or expense account is debit, while the normal balance of a liability, equity or income account is credit.
True
Combining a debit amount with a debit amount results to addition.
True
The system of recording used in financial reporting is called multiple-enty system.
False
Every transaction has a two-fold effect on values. This concept is called “matching”.
False
Debit is simply the left side, while credit is the right ride, of an account.
True
When recording business transactions, you see to it that for every peso that you debit, there is a corresponding peso that you credit. You are applying the concept of equilibrium.
True
If you want to increase the balance of a liability account, you will debit it.
False
Under the double-entry system, sometimes a business transaction is recorded throught a debit alone or a credit alone.
False
Your general ledger shows total notes payable of Php10M. You only have two bank loans - one from Bank A and the other one from Bank B. If the loan from Bank A has a balance of Php4M, the loan from Bank B must be Php8M.
False
