Question Details

ACCT/510 ACCT510 ACCT 510 CHAPTER 4 TRUE-FALSE STATEMENTS PART 3

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE


TRUE-FALSE STATEMENTS


21. An incorrect debit to Accounts Receivable instead of the correct account Notes
Receivable does not require a correcting entry because total assets will not be misstated.

22. In a corporation, Retained Earnings is a part of owners' equity.

23. A company's operating cycle and fiscal year are usually the same length of time.

24. Cash and office supplies are both classified as current assets.

25. Long-term investments would appear in the property, plant, and equipment section of the
balance sheet.

26. A liability is classified as a current liability if the company is to pay it within the forthcoming
year.

27. A company's liquidity is concerned with the relationship between long-term investments
and long-term debt.

28. Current assets are customarily the first items listed on a classified balance sheet.

29. The operating cycle of a company is determined by the number of years the company has
been operating.

a30. Reversing entries are an optional bookkeeping procedure.
Additional True-False Questions

31. After a worksheet has been completed, the statement columns contain all data that are
required for the preparation of financial statements.

32. To close net income to owner's capital, Income Summary is debited and Owner's Capital
is credited.

4 - 6 Test Bank for Accounting Principles, Eighth Edition
33. In one closing entry, Owner's Drawing is credited and Income Summary is debited.

34. The post-closing trial balance will contain only owner's equity statement accounts and
balance sheet accounts.

35. The operating cycle of a company is the average time required to collect the receivables
resulting from producing revenues.

36. Current assets are listed in the order of liquidity.

37. Current liabilities are obligations that the company is to pay within the coming year.