accounting questions - true or false!! help!?
accounting questions - true or false!! help!?
1)An audit guarantees that the financial statements are free of all misstatements
2)The payment of a liability in cash will decrease owners' equity
3)It is not possible for the left side of the equation to both increase/decrease as a result of the same transaction
4)Debits always increase and credits always decrease the accounts
5)In a journal entry, the debits must equal the credits and at least three accounts are affected by the transaction
6)An example of ongoing operations is revenue earned through the sale of a new automobile by a car dealership
7)Example of revenue earned from ongoing operating activities is the sale of an extended warranty contract on a washer and dryer
8)Cash flow operations would include cash used to purchase new equip
9)The ledger contains info which has been posted from the journal
10)Usually, adjusted entries are entered in the accounts at the beginning of the accounting period
11)Rev collected in advance of being earned reps a liability until it is earned
Answers:
2007-07-05 03:28:25
Serge M: 1. False. There is no guarantee. An audit results in expressing an opinion on the fairness of the statements. 2. False. Owners' equity is not affected by such a transaction. 3. False. The equation is A = L + C. An asset can increase while another asset decreases in a transaction that results in a gain or loss. Increase cash $100, decrease inventory $60, (both are assets) will result in a $40 increase in capital . 4. False. Debits increase assets and decrease liabilities. 5. False. Debits have to equal credits but the entry can affect two or more accounts. 6. True. A car dealer is in the business of selling cars, so a sale is part of ongoing operations. 7. True with admonition. A warranty contract may extend over several years. Part may be earned this year and is an ongoing operation, and the rest is deferred to future years. If the warranty contract covers only future periods than it is not part of ongoing operations. It is a bad question. 8. False, if you mean cash flow from operations. Purchase of equipment is an investing activity. 9. True. Journal entries are made first, then posted to the ledger. 10. False. Adjusting entries are made at the end of the accounting period to bring the accounts up to date for preparing financial statements. 11. True. The entity is obligated to provide future services or products. As they are provided the liability is reduced and the revenue earned.
2007-07-05 03:53:53