Test Bank For Intermediate Accounting 9th Edition By Spiceland

Chapter 02 Review of the Accounting Process Answer Key True / False Questions1. Owners’ equity can be expressed as assets minus liabilities.TRUEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.Level of Difficulty: 1 EasyTopic Area: Accounting equation2. Debits increase asset accounts and decrease liability accounts.TRUEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.Level of Difficulty: 1 EasyTopic Area: Account relationships and records3. Balance sheet accounts are referred to as temporary accounts because their balances are always changing.FALSEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

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Blooms: RememberLearning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.Level of Difficulty: 1 EasyTopic Area: Account relationships and records4. After an unadjusted trial balance is prepared, the next step in the accounting processing cycle isthe preparation of financial statements.FALSEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-01 Analyze routine economic events-transactions and record their effects on a company’s financial position using the accounting equation format.Level of Difficulty: 1 EasyTopic Area: Accounting processing cycle steps5. Adjusting journal entries are recorded at the end of any period when financial statements are prepared.TRUEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-04 Identify and describe the different types of adjusting journal entries. Level of Difficulty: 1 EasyTopic Area: Analyze updating-Record adjusting entry6. Accruals occur when the cash flow precedes either revenue or expense recognition.FALSEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-04 Identify and describe the different types of adjusting journal entries.

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Level of Difficulty: 1 EasyTopic Area: Analyze the updating-Identify type of adjustment7. The adjusted trial balance contains only permanent accounts.FALSEAACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-05 Record adjusting journal entries in general journal format; post entries; and prepare an adjusted trial balance.Level of Difficulty: 1 EasyTopic Area: Trial balance―Adjusted8. The income statement summarizes the operating activity of a firm at a particular point in time.FALSEAACSB: Reflective Thinking AICPA: BB Critical ThinkingAICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 EasyTopic Area: Financial statement―Income Statement9. The balance sheet can be considered a change or flow statement.FALSEAACSB: Reflective Thinking AICPA: BB Critical ThinkingAICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 EasyTopic Area: Financial statement―Balance sheet

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10. The statement of cash flows summarizes transactions that caused cash to change during a reporting period.TRUEAACSB: Reflective Thinking AICPA: BB Critical ThinkingAICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: RememberLearning Objective: 02-06 Describe the four basic financial statements. Level of Difficulty: 1 EasyTopic Area: Financial statement―Cash flow