Bank statements are typically provided to bank account holders monthly.

True

False

Correct!

Review the section "Step 1: Analyze Business Transactions."

The first stage of the accounting cycle is to analyze business transactions.

True

False

Correct!

Review the section "Step 1: Analyze Business Transactions."

Complying with GAAP is optional when recording journal entries.

True

False

Correct!

Review the section "Generally Accepted Accounting Principles."

The revenue principle dictates that revenue must be recorded in the same period the cash payment is received.

True

False

Correct!

Review the section "Generally Accepted Accounting Principles."

As part of the accounting cycle, three trial balances are completed.

True

False

Correct!

Review the section "Step 7: Closing Entries and the Post-Closing Trial Balance."

You prepare the unadjusted trial balance before posting journal entries.

True

False

Correct!

Review the section "Step 4: Unadjusted Trial Balance."

A benefit of the unadjusted trial balance is that it identifies all errors made during the period.

True

False

Correct!

Review the section "Step 4: Unadjusted Trial Balance."

Adjusting entries are associated with the accrual basis of accounting.

True

False

Correct!

Review the section "Step 5: Adjusting Entries and Adjusted Trial Balance."

The final figure on the income statement is net income (or net loss).

True

False

Correct!

Review the section "Step 6: Financial Statements."

The balance sheet is a reconciliation that displays all activity related to owner’s equity.

True

False

Correct!

Review the section "Step 6: Financial Statements."

What is NOT considered a source document?

A transaction

A check

A bank statement

A deposit slip

Correct!

Review the section "Step 1: Analyze Business Transactions."

What’s the first step of the accounting cycle?

Record the journal entries

Prepare the unadjusted trial balance

Analyze the transactions

Create the financial statements

Correct!

Review the section "Step 1: Analyze Business Transactions."

Which principle requires expenses are recorded in the same period the revenue is generated?

Time-period principle

Cost principle

Matching principle

Full-disclosure principle

Correct!

Review the section "Generally Accepted Accounting Principles."

Which of these is NOT a financial statement?

A balance sheet

A statement of owner’s equity

A statement of cash flows

A post-closing trial balance

Correct!

Review the section "Step 6: Financial Statements."

Which statement describes a sales order?

It’s sent by the bank to the company and outlines all activity during the month.

It provides information regarding a payment received from a customer or made to a supplier.

Prepared by the purchasing company, it indicates a desire to purchase items from a seller.

Prepared by a seller upon receipt of a purchase order, it verifies the seller’s intent to accept the terms of the purchase order.

Correct!

Review the section "Step 1: Analyze Business Transactions."

What is a recurring entry?

An infrequent entry

A type of entry that’s recorded differently every accounting period

One that is recorded in the same manner every accounting period

An entry that requires a new source document each time it’s recorded

Correct!

Review the section "Step 1: Analyze Business Transactions."

Which principle dictates that accounting activity may be expressed over a specific period?

Cost principle

Time-period principle

Full disclosure principle

Matching principle

Correct!

Review the section "Generally Accepted Accounting Principles."

What’s something the unadjusted trial balance CANNOT do?

Help confirm account balances are correctly calculated

Summarize account balances in one location

Identify all potential errors

Locate transposition errors (such as $123 instead of $132)

Correct!

Review the section "Step 4: Unadjusted Trial Balance."

Under the accrual basis of accounting, is recorded when earned and expenses are recorded when .

Review the section "Step 5: Adjusting Entries and Adjusted Trial Balance."

Which account would appear on a balance sheet?

Sales Revenue

Equipment

Utilities Expense

Service Revenue

Correct!

Review the section "Step 6: Financial Statements."