MIDTERM REVIEW - FABM 1

An amount recorded on the right side of a T account is a debit

• TRUE

• FALSE

Each liability account has a normal debit balance.

• TRUE

• FALSE

Asset accounts decrease on the credit side.

• TRUE

• FALSE

Each transaction changes the balances in at least two accounts

• TRUE

• FALSE

When cash is paid for supplies, the Supplies account is increased by a credit.

• TRUE

• FALSE

A drawing account is increased by debits and decreased by credits.

• TRUE

• FALSE

Increases in expense accounts are recorded as debits because they decrease the owner's capital account.

• TRUE

• FALSE

Inventory is recorded at the lower cost or net realizable value rather than the expected selling price. This ensures profit on the sale of inventory is only realized when the actual sale takes place.

• Going Concern

• Materiality Concept

• Prudence Concept

• History Cost

Financial statements contain all information necessary to understand a business's financial condition

• Full Disclosure

• Going Concern

• Periodicity

• Objectivity

GAAP stands for:

• Generally Accepted Auditing Procedures

• Generally Accepted Accounting Procedures

• Generally Accepted Accounting Principles

• Generally Auditing Accounting Principles