Answer true or false to the following statements: 6. For the trial balance to balance the debits must equal the credits. 7. The normal balance of all liability accounts is a debit. 9. The normal...
Answer true or false to the following statements:
6. For the trial balance to balance the debits must equal the credits.
7. The normal balance of all liability accounts is a debit.
9. The normal balance in an asset account is a debit.
11. The normal balance of a revenue account is a credit.
12. If the trial balance balances, it proves that all of the entries have been made correctly.
13. If an entry has been posted to the accounts twice, the trial balance will still balance.
14. Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.
19. Transactions are recorded in alphabetical order in a journal.
20. The chart of accounts is list of all the accounts in a company.
21. A chart of accounts should be arranged in alphabetical order for easier reference.
22. A trial balance does not prove that all transactions have been recorded or that the ledger is correct.
23. Errors in a trial balance may only be caused by an error in posting the journal entries to the accounts.
7. False. Liability accounts, like revenue and equity are reflected as credits.
12. False. Wrong postings, transposed credits and debits, transposed numbers themselves or duplicated or omitted postings could still need addressing.
14. False. As transactions occur, they are analysed to establish which account will be affected and how they will be affected.
19. False. Usually in chronological (date) order
21. False. It can be arranged in any order as preferred. A numeric order is sometimes preferred in computerized systems.
23. False. (See Q 12. Other errors can occur such as entries which have not been made at all, entries to incorrect accounts, debits reflected as credits and credits reflected as debits, numbers that have been transposed, and so on.)
6. True, in other words Assets=equities(i.e. owner's equity+liability).
7. False, the normal balance of all liability accounts is credit.
12. Usually true, although can be false in some cases, eg. if the statement is: "payment of a/c payable $350" but it has been recorded $3500 in journal or trial balance, in this case the trial balance will be balanced, but incorrect.
14. False, they are analysed first.
19. False, they are recorded in chronological order.
21. False, list can be numerical, alphabetical, alpha numeric, usually computerized methods use numeric order.