1) A withdrawal by the owner is recorded as a deduction from assets and a deduction from liabilities. True False2) The income statement reports the financial position of an enterprise. True False3) The adjusting entry for depreciation is a debit to an expense account and a credit to an asset account. True False4) A reversing entry is made to cancel an incorrect entry. True False5) Recording the debits and credits of a transaction twice will cause the trial balance totals to be unequal. True False6) A credit means an entry on the right side of an account. True False7) Table 1: The accounts and their balances as of Dec. 31 of this year for MMD Company are:Accounts Payable = $32,400; Accounts Receivable = $4,200; Advertising Expense = $960; Cash = $ 11,100; Equipment = $51,000; Income from Services = $19,200; Insurance Expense = $480; Owner, Capital, Jan. 1 = $33,480; Owner, Drawing = $4,800; Rent Expense = $2,850; Supplies = $3,120; Utilities Expense = $1,770; Wages Expense = $4,800.Using Table 1, the amount of the Total Assets is ______________.?8) When cash is received in payment of an accounts receivable, which of the following is true?Total assets and total owner’s equity increaseTotal assets increaseTotal assets decreaseTotal assets remain the sameNone of the above9) Payment of a liability willdecrease total liabilities and decrease total owner’s equitydecrease total assets and decrease total liabilitieshave no effect on total assets and owner’s equitydecrease total assets and increase total liabilitiesnone of the above10) A company paid creditors on account, $1,000. The effect of the transaction on the accounting equation isa decrease in an asset and a decrease in a liabilitya decrease in an asset and a decrease in owner’s equityan increase in an asset and a decrease in a liabilityan increase in a liability and a decrease in an assetnone of the above11) A cash payment of $230 to a creditor was recorded as $320 debit to Accounts Payable and a $320 credit to Cash. The necessary correcting entry is:debit to Cash, $90, credit to Accounts Receivable, $90debit to Accounts Payable, $90, credit to Cash, $90debit Cash, $90, credit Accounts Payable, $90debit Accounts Receivable, $90, credit Cash, $90none of the above
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