True/False
Indicate whether the statement is true or false.
1. A corporation is a business that is legally separate and distinct from its owners.
2. Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized corporations.
3. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.
4. Depending on the account title, the right side of the account is referred to as the credit side.
5. To determine the balance in an account, always subtract credits from debits.
6. The increase side of all accounts is the normal balance.
7. Liability accounts are increased by debits.
8. Expense accounts are increased by credits.
9. Revenue accounts are increased by credits.
10. The normal balance of a capital stock account is a debit.
11. The normal balance of the dividend account is a debit.
12. The normal balance of an expense account is a credit.
13. The normal balance of revenue accounts is a credit.
14. Dividends decrease stockholders' equity and are listed on the income statement as a deduction from
15. The right hand side of a T account is known as a debit and the left hand side is known as a credit.
16. The cash account will always be debited.
17. Liabilities are debts owned by the business entity.
18. Revenues is the difference between cash receipts and cash payments.
19. Retained earnings will be reduced by the amount in the dividend account.
20. Debits will increase Unearned Revenues and Revenues.
21. The revenue recognition concept states that revenue should be recorded in the same period as the revenue is received.
22. An example of deferred revenue is Unearned Rent.
23. Revenues and expenses should be recorded in the same period in which they relate.
24. The updating of accounts is called the adjusting process.
25. Adjusting entries affect only expense and asset accounts.
26. An unearned revenue is a liability.
27. There is really no benefit in preparing financial statements in any particular order.
28. Prepaid Insurance is an example of a current asset.