Test Review

The posting of a transaction refers to entering amounts in the ledger accounts as directed by general ledger journal entries

• True

• False

Nicole paid $5,000 on an account payable. What statement is correct

• Debit cash $5,000, credit accounts payable $5,000

• Debit accounts payable $5,000, credit accounts receivables $5,000

• Debit accounts payable $5,000, credit cash $5,000

• Debit cash $5,000, credit accounts receivable $5,000

Debits increase assets

• True

• False

The cost principle of valuing assets may not indicate the true value of the assets as time goes by

• True

• False

The materiality of a particular transaction may need to be considered in deciding whether or not to conform to the other accounting principles.

• True

• False

The owner of a hotel borrowed $300,000 on a mortgage payable. Which of the following statements is correct?

• Debit mortgage payable $300,000, credit cash $300,000

• Debit cash $300,000, credit owner's equity $300,000

• Debit cash $300,000, credit mortgage payable $300,000

• Debit owner's equity $300,000, credit mortgage payable $300,000

Cash basis accounting should never be used in a hospitality business

• True

• False

A restaurant had sales of $100,000, but only received $50,000. Accrual basis accounting would only record $50,000.

• True

• False

Accrual accounting only records revenues when they are received and expenses when they are paid.

• True

• False