PoF - Midterm Test - 2020

One of the general rules of the double-entry system is that total debits must always be equal to total credits.

• True

• False

Business transactions are economic events that should be recorded in the accounting records.

• True

• False

Generally accepted accounting principles state that all business transactions should be valued at fair value both when they occur and at all subsequent reporting dates.

• True

• False

All expenses incurred by a business are paid immediately in cash

• True

• False

A purchase should usually not be recognized (recorded) before the title is transferred because, until that point, the vendor has not fulfilled its contractual obligation and the buyer has no liability.

• True

• False

When a company pays an employee for work performed, it is considered an economic event that is not recorded as a transaction.

• True

• False

When a business hires a new employee, a recordable transaction has occurred.

• True

• False

The general ledger is used to record the details of each transaction. The general journal is used to update each account.

• True

• False

Once in a while, a transaction leaves an account with a balance that isn’t “normal.” When this occurs, the “abnormal” balance should be corrected to the “normal” balance before copying the balance into the trial balance.

• True

• False

When the columns of the trial balance equal each other, it is still possible that errors may have occurred in recording and posting the transactions.

• True

• False