1. We record treasury stock at the cost of the shares acquired. True or false. 2

Question

1. We record treasury stock at the cost of the shares acquired. True or false.

2. When accounts payable decrease, cash paid to suppliers must have been more than purchases. True or false.

3. The assumption that in the absence of contrary information a business entity will continue for a definate period of time is the going concern assumption. True or false.

4. When customers pay for services with a check, the company should debit Accounts Receivable and credit Service Revenue. True or false.

5. On December 31, 2017, employees who earn $500 per day have worked eight days and will be paid on January 6, 2018. The adjusting entry on December 31, 2017, includes a debit to Salaries Expense for $4,000. True or false.

6. Operating income and income from continuing operations are not the same amount. True or false.

7. The percentage-of-receivables method for estimating uncollectible accounts is commonly referred to as the balance sheet method, because the estimate of bad debts is based on a balance sheet amount—accounts receivable. True or false.

8. After posting transactions to the general ledger accounts, the sum of the accounts with debit balances should equal the sum of the accounts with credit balances. True or false.

9. Cash is always reported as a current asset in the balance sheet. True or false.

10. The statement of cash flows reports a company's cash inflows and cash outflows related to (1) operating activities, (2) investing activities, and (3) financing activities. True or false.

Explanation / Answer

1. True 2. True 3. True 4. False, Bank account should get debited instead of Accounts Receivable 5. True 6. False 7. True 8. True, assuming double entry book keeping system is adopted 9. True 10. True

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