True/False
Indicate whether the sentence or statement is true or false.
____ 1. The Objective Evidence accounting concept requires that there be proof that a transaction did occur.
____ 2. Examples of source documents include checks, sales invoices, memorandums, and letters.
____ 3. The source document for all cash payments is a sales invoice.
____ 4. A receipt is the source document for cash received from transactions other than sales.
____ 5. A calculator tape is the source document for daily cash sales.
____ 6. The source document used when supplies are bought on account is a memorandum.
____ 7. The source document used when supplies bought on account are paid for is a check.
____ 8. Information in a journal includes the debit and credit parts of each transaction recorded in one place.
____ 9. The source document sales invoice is abbreviated as SI in a journal entry.
____ 10. The accounts affected when paying cash for rent are Rent Expense and Cash.
____ 11. The accounts affected when paying cash to the owner for personal use are the drawing account and Cash.
____ 12. To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place.
____ 13. Dollars and cents signs and decimal points should be used when writing amounts on ruled accounting pages.
____ 14. Checks and sales invoices are pre-numbered in sequence to help account for them.
____ 15. The accounts affected when cash is received from the owner as an investment are Cash and the drawing account.
____ 16. When cash is paid for supplies, the cash account is debited.
____ 17. When cash is used to pay for insurance, the asset account Prepaid Insurance decreases.
____ 18. When cash is received from sales, both the cash account and the sales account are increased.
____ 19. When cash is received on account, two asset accounts increase.
____ 20. When services are sold on account, an asset account and a revenue account are affected.
____ 21. If there is only one blank line remaining on a journal page, it is standard practice to split the entry and record the second line of the entry on the next page.
____ 22. Recording transactions in a journal is called posting.
____ 23. A business form giving written acknowledgement for cash received is a receipt.
____ 24. A source document is a form for recording transactions in chronological order.
____ 25. A memorandum is a form on which a brief message is written describing a transaction.
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 26. The recording of debit and credit parts of a transaction is ____. a. checking equality c. single-entry accounting b. double-entry accounting d. transaction analysis
____ 27. Preparing source documents for each transaction is an application of the accounting concept ____. a. Business Entity c. Objective Evidence b. Unit of Measurement d. Going Concern
____ 28. A business form ordering a bank to pay cash from a bank account is a ____. a. check b. memorandum c. receipt d. all of the above
____ 29. A journal entry includes ____. a. the debit part of a transaction recorded under one date and credit part recorded under a later date b. the debit and credit parts of a transaction recorded in one place c. more debits than credits d. none of the above
____ 30. Transactions are recorded in a journal in order by ____. a. date c. source document b. account name d. none of the above
____ 31. Double-entry accounting assures that ____. a. a transaction did occur b. transaction data is recorded c. debits equal credits d. none of the above
____ 32. The entry to record receipt of cash from the owner as an investment is ____. a. debit Capital, credit Cash c. debit Cash, credit Accounts Payable b. debit Cash, credit Capital d. none of the above
____ 33. The account debited when cash is paid for supplies is ____. a. Supplies c. Supplies Expense b. Cash d. none of the above
____ 34. When cash is paid for insurance, ____. a. the Prepaid Insurance account is decreased b. the Prepaid Insurance account is credited c. the balance of the Prepaid Insurance account is increased d. none of the above
____ 35. When supplies are bought on account, the account debited is ____. a. Cash c. Accounts Payable b. Supplies d. none of the above
____ 36. When cash is paid for an expense, the expense account is ____. a. credited c. zero b. debited d. none of the above
____ 37. A general journal page is complete when ____. a. it is the last day of the month b. there is insufficient space to record any more entries c. the fiscal period is completed d. none of the above
____ 38. Which of the following statements is false? a. Words in accounting records are written in full when space permits. b. Words may be abbreviated only when space is limited. c. Abbreviations are preferable to writing out words in full. d. Neatness is very important in accounting records.

____ 39. The source document for cash payments is a ____. a. receipt c. memorandum b. sales invoice d. check
____ 40. If an error is recorded in a journal entry, ____. a. cancel the error by drawing a neat line through the error b. correct the entry by writing the correct item above the canceled error c. do not erase the incorrect item d. all of the above
____ 41. A journal entry consists of ____. a. debits and credits b. date c. source document d. all of the above
____ 42. When services are sold on account, ____. a. Accounts Receivable is debited and Sales is credited b. Sales is debited and Accounts Receivable is credited c. Accounts Payable is debited and Sales is credited d. Sales is debited and Accounts Payable is credited
____ 43. A memorandum is prepared when ____. a. no other source document is prepared for a transaction b. an additional explanation is needed about a transaction c. both A and B d. neither A nor B