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    True or False questions regarding accounting fundamentals

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    Indicate whether each statement is true (T) or false (F).

    (1) If a journal entry affects one asset account and two liability accounts, that
    journal entry must be out of balance in reference to the accounting equation.

    (2) If a business's trial balance is "in balance", then the entity's accounting records are free of any errors.

    (3) Contra-accounts are typically treated as offsets to related accounts for finan¬cial statement purposes.

    (4) Every business transaction must be recorded so that the accounting equation for that business remains in balance.

    (5) Journal entries may contain several debits and one credit, several credits and one debit, or multiple debits and multiple credits.

    (6) A company that has consistently experienced net losses throughout its exis¬tence will have a credit balance in its Retained Earnings account.

    (7) The initial step of the closing process is posting journal entry data to the
    appropriate general ledger accounts.

    (8) An Income Summary account is a permanent account that is used during the preparation of period-ending adjusting journal entries.

    (9) A primary purpose of period-ending adjusting journal entries is to avoid vio¬lations of the revenue recognition and expense recognition rules.

    (10) Privately-owned companies typically prepare a formal set of financial state¬ments for external users only once per year.

    (11) The temporary accounts of a business must begin each accounting period with a zero balance.

    (12) Most of the information needed by accountants to analyze business transac¬tions is found in source documents. .

    (13) Double-entry bookkeeping is a financial record keeping system used only in the United States and a few European countries.

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