TRUE or FALSE questions 1. Current ratios and quick ratios usually provide a cle
ID: 2479342 • Letter: T
Question
TRUE or FALSE questions
1. Current ratios and quick ratios usually provide a clear picture of the financial leverage employed by a firm.
2. Debits always increase an account, while credits decrease an account.
3. The two major sections of the statement of cash flows are sources of cash and uses of cash.
4. An accounting entity is considered to be any organization for which separate accounting data is gathered and processed.
5. Since the total of all the right-hand sides of accounts equals the total of left-hand sides, then the total amount of increases entered in the general ledger must equal the total amount of decreases.
6. The statement of financial position shows how well a company has performed over a period of time.
Explanation / Answer
1. False. Both ratios are liquidity ratios.
2. False. If you debit accounts payable, it decreases.
3. False. The statement of cash flows is divided into the sections: operating activities, investing activities and financing activities.
4. True.
5. True. Follows from the duality principle that every debit would have an equal and corresponding credit, and vice versa.
6. False. The statement of financial position or the balance sheet is a position or status statement and shows the financial position as on a given date in terms of assets and liabilities. The income statement on the other hand shows how well a company has performed over a period of time.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.