Test Bank For Intermediate Accounting David Spiceland James Sepe Mark Nelson 8th Edition

Test Bank For Intermediate Accounting David Spiceland James Sepe Mark Nelson 8th Edition

Chapter 02

Review of the Accounting Process

True / False Questions
1. Owner’s equity can be expressed as assets minus liabilities.

True False

2. Debits increase asset accounts and decrease liability accounts.

True False

3. Balance sheet accounts are referred to as temporary accounts because their balances are always changing.

True False

4. After an unadjusted trial balance is prepared, the next step in the accounting processing cycle is the preparation of financial statements.

True False

5. Adjusting journal entries are recorded at the end of any period when financial statements are prepared.

True False

6. Accruals occur when the cash flow precedes either revenue or expense recognition.

True False

7. The adjusted trial balance contains only permanent accounts.

True False

8. The income statement summarizes the operating activity of a firm at a particular point in time.

True False

9. The balance sheet can be considered a change or flow statement.

True False

10. The statement of cash flows summarizes transactions that caused cash to change during a reporting period.

True False