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TRUE/FALSE. Write \'T\' if the statement is true and \'F if the statement is fal

ID: 2539939 • Letter: T

Question

TRUE/FALSE. Write 'T' if the statement is true and 'F if the statement is false. 41) Generally accepted accounting principles are the basic assumptions, concepts, and 41)_ guidelines for preparing financial statements. 42) An external transaction is an exchange within an entity that may or may not affect the 42) . accounting equation. 43) The balance sheet reports the financial position of a company at a point in time. 44) Asset accounts are normally decreased by debits. 45) The adjusted trial balance must be prepared before the adjusting entries are made. 46) The periodic inventory system requires updating the inventory account only at the end 43) 44) 45) 46) of the period to reflect the quantity and cost of goods available for sale and the cost of goods sold. 47) Accounting is an information and measurement system that identifies,records, and 47) communicates relevant, reliable, and comparable information about an organization's business activities. 48) Credits always increase account balances. 48) 49) If all columns of a completed work sheet balance, you can be sure that no errors were 49) made in its preparation. 50) n a perpetual inventory system, the Merchandi inventory system, the Merchandise Inventory account must be closed at 50) the end of the accounting period.

Explanation / Answer

41.

True

This is the set of rules, assumption, concept, etc for making accounting entries and records.

42.

False

Accounting equation: Assets = Liabilities + Capital

All sorts of external transaction must affect the accounting equation. Example: loan of $2,000 increases liability and increases assets because of incoming cash.

43.

True

Balance sheet reflects financial position of a company till date. It includes all assets, liabilities, and capital.

44.

False

As per the golden rule of accounting asset, what comes in is debit and what goes out is credit. Therefore, debit increases the asset.