Unit 5: Accounting & Finance Review

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

• True

• False

Double-entry bookkeeping requires that every transaction be approved by two different people before it can be recorded.

• True

• False

The accounting book that provides all the information about a single account in one place is called the ledger.

• True

• False

There are two major financial statements prepared at the completion of the accounting cycle: balance sheet and income statement.

• True

• False

One of the statements prepared in the accounting cycle is the balance sheet.

• True

• False

The key financial statements are the balance sheet, the income statement, and the statement of cash flows.

• True

• False

The income statement reports the difference between a business's assets and liabilities as of a certain date.

• True

• False

The balance sheet reports revenues and expenses for a specific period of time—a month, or a year, for example.

• True

• False

Assets are reported on the firm's balance sheet.

• True

• False

Liabilities are reported on the income statement.

• True

• False