Accounting Part 1 Test Review

A transaction recorded in a journal is not considered a permanent record

• True

• False

A balance sheet reports financial information for a period of time

• True

• False

The source document for an electronic funds transfer is a memorandum

• True

• False

The drawing account is a permanent account

• True

• False

A transaction for the sale of goods or services results in a decrease in owner’s equity

• True

• False

The formula for calculating net income is total revenue minus total expenses

• True

• False

If the previous account balance and the current entry posted to an account are both credits, the new account balance is a credit

• True

• False

Adjusting entries must be posted to the general ledger accounts

• True

• False

Temporary accounts are used to accumulate information until it is transferred to the owner’s capital account

• True

• False

If an error is recorded in a journal entry

• cancel the error by drawing a neat line through the error

• correct the entry by writing the correct item above the canceled error

• do not erase the incorrect item

• all of these