Chapter 6: Business Transactions and their Analysis Flashcards
True or False
Identifying transactions that are accountable and analyzing their effects is the first step in the accounting cycle
True
True or False
There can be no journal entry with only one debit but no credits, or vice versa
True
True or False
Entity A sells goods. Entity A will most likely record the sale in two journal entries - one to record sales and one to record the cost of sales
True
True or False
The “cost of sales” account is an asset account
False
True or False
A cash purchase of equipment increases the total assets of an entity
False
True or False
Business transactions are normally identified from “source documents”
True
True or False
After an accountable event is identified, the second step is to record it in the ledger
False
True or False
A simple journal entry is one that contains two or more debits or credits
False
True or False
Losses from typhoons and similar calamities are considered external events
False
True or False
All of the ten steps in the accounting cycle are required; none is optional
False
The account that is debited everytime a business receives money is
a. cash
b. accounts receivable
c. money
d. wallet
a. cash
The source documents that evidence the sale of goods is
a. sales invoice
b. official receipt
c. bank statement
d. check
a. sales invoice
You have a business. Every time your business makes a disbursement, you will credit which of the following accounts?
a. cash
b. accounts payable
c. disbursements
d. pocket
a. cash
A business prepares this document when making purchases
a. sales invoice
b. official receipt
c. purchase order
d. delivery receipt
c. purchase order
Your business sells goods to a credit customer. Which of the following accounts is increased?
a. accounts receivable
b. sales
c. cost of sales
d. all of these
d. all of these
Entity A purchases inventories and pays outright in cash. This transaction would result in an increase in
a. total assets
b. total liabilities
c. total assets and total liabilities
d. no effect on total assets and liabilities
d. no effect on total assets and liabilities
Entity A makes the following journal entry:
Accounts receivable 900,000
Cost of sales 400,000
Sales 900,000
Inventory 400,000
The journal entry above is
a. simple entry
b. a compound entry
c. a complicated entry
d. no id, no entry
b. a compound entry
Purchases of inventory on account increase which of the following accounts?
a. inventory
b. accounts payable
c. cash
d. a and b
d. a and b
Cash drawings of a business owner from the business increase which of the following accounts?
a. owner’s drawings
b. cash
c. a and b
d. none of these
a. owner’s drawings
The account that is credited when a business earns revenue from rendering services is
a. sales
b. service fees/revenue
c. accounts receivable
d. b and c
b. service fees/revenue
