part two—identifying accounting concepts and practices directions: place a t for true or an f for false in the answers column to show whether each of the following statements is true or false. 1. information in a journal includes the debit and credit parts of each transaction recorded in one place. (p. 59) 2. the objective evidence accounting concept requires that there be proof that a transaction did occur. (p. 59) 3. examples of source documents include checks, sales invoices, receipts, and memorandums. (p. 59) 4. a memorandum is the source document used when items are paid in cash. (p. 61) 5. a receipt is the source document for cash received from transactions other than sales. (p. 61) 6. a calculator tape is the source document for daily cash sales. (p. 61) 7. the accounts affected when cash is received from the owner as an investment are cash and sales. (p. 62) 8. when cash is paid for supplies, the cash account is debited. (p. 63) 9. when cash is used to pay for insurance, the asset account prepaid insurance increases. (p. 65) 10. the source document used when supplies are ordered by telephone on account is a memorandum. (p. 66) 11. the source document used when supplies bought on account are paid for is a receipt. (p. 67) 12. when cash is received from sales, both the cash account and the sales account are increased. (p. 70) 13. the source document sales invoice is abbreviated as s in a journal entry. (p. 71) 14. when services are sold on account, an asset account and a liability account are affected. (p. 71) 15. the accounts affected when paying cash for equipment rental are equipment rental expense and cash. (p. 72) 16. when cash is received on account, one asset account increases and another asset account decreases. (p. 73) 17. the accounts affected when paying cash to the owner for a withdrawal of equity are the capital account and cash. (p. 74) 18. 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. (p. 76) 19. to correct an error in a journal, simply erase the incorrect item and write the correct item in the same place. (p. 78) 20. if an error is detected in a journal entry after several additional journal entries have been made, the entry should be corrected by drawing a line through the incorrect parts and writing the correct parts on the same line above the error. (p. 78)

Question

Accepted Answer

To solve these true - false questions, we analyze each statement based on accounting concepts and practices:

### Question 1
- **Explanation**: Journals record the debit and credit of each transaction in one place.
- **Answer**: T

### Question 2
- **Explanation**: The Objective Evidence concept needs proof of transactions.
- **Answer**: T

### Question 3
- **Explanation**: Checks, sales invoices, etc., are valid source documents.
- **Answer**: T

### Question 4
- **Explanation**: A check (not a memorandum) is used when paying cash.
- **Answer**: F

### Question 5
- **Explanation**: Receipts document cash received from non - sales transactions.
- **Answer**: T

### Question 6
- **Explanation**: A calculator tape can be the source document for daily cash sales.
- **Answer**: T

### Question 7
- **Explanation**: Cash and Owner's Capital (not Sales) are affected by owner's investment.
- **Answer**: F

### Question 8
- **Explanation**: When cash is paid, the Cash account is credited (not debited).
- **Answer**: F

### Question 9
- **Explanation**: Paying for insurance increases Prepaid Insurance (an asset).
- **Answer**: T

### Question 10
- **Explanation**: A memorandum is used for telephone - ordered supplies on account.
- **Answer**: T

### Question 11
- **Explanation**: A check (not a receipt) is used to pay for supplies on account.
- **Answer**: F

### Question 12
- **Explanation**: Cash received from sales increases both Cash and Sales.
- **Answer**: T

### Question 13
- **Explanation**: A sales invoice is abbreviated as "SI" (not "S") in journal entries.
- **Answer**: F

### Question 14
- **Explanation**: Selling services on account affects an asset (Accounts Receivable) and a revenue (not a liability) account.
- **Answer**: F

### Question 15
- **Explanation**: Paying for equipment rental affects Equipment Rental Expense and Cash.
- **Answer**: T

### Question 16
- **Explanation**: Receiving cash on account increases Cash (asset) and decreases Accounts Receivable (asset).
- **Answer**: T

### Question 17
- **Explanation**: Owner's Withdrawal (not capital) and Cash are affected by owner's withdrawal.
- **Answer**: F

### Question 18
- **Explanation**: We do not split entries; we start a new page.
- **Answer**: F

### Question 19
- **Explanation**: We do not erase; we use correction procedures like drawing a line.
- **Answer**: F

### Question 20
- **Explanation**: This is the correct way to correct journal entry errors after subsequent entries.
- **Answer**: T

The answers in order are: 1. T, 2. T, 3. T, 4. F, 5. T, 6. T, 7. F, 8. F, 9. T, 10. T, 11. F, 12. T, 13. F, 14. F, 15. T, 16. T, 17. F, 18. F, 19. F, 20. T

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