accounting true or false Flashcards
(18 cards)
accounting is the language of business
true
a creditor would favor a positive net worth
true
The principles of right and wrong that guide an individual in making personal decisions is called business ethics
false
Keeping personal and business records separate is an application of the business entity concept.
true
Generally Accepted Accounting Principles, GAAP, allows for flexibility in reporting
False
Recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept
false
Assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business
true
The relationship among assets, liabilities, and owner’s equity can be written as an equation
true
the accounting equation does not have to be in balance to be correct
false
when a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage
false
when items are bought and paid for later, this is referred to as buying on account
true
when cash is paid on account, a liability is increased
false
when cash is paid for expenses, the business has more equity
true
the accounting concept realization of revenue is applied when revenue is recorded at the time goods or services are sold
true
when cash is paid for expenses, the business has more equity
false
if two amounts are recorded on the same side of the accounting equation, the equation will no longer be be in balance
false
when a company receives cash from a customer for a prior sale, the transaction increases the cash account balance and increases the accounts receivable balance
false
a withdrawal decreases owner’s equity
true
