Question

Please explain why?

Thanks

6. In general, debits refer to increases in account balances, and credits refer to decreases.

False

7. The first step in the accounting cycle is the journalizing of transactions and selected other events.

False

10. If a company fails to post one of its journal entries to its general ledger, the trial balance will not show an equal amount of debit and credit balance accounts.

False

13. The book value of any depreciable asset is the difference between its cost and its salvage value.

False

Answer 1

Answers

• #6

The statement is FALSE because the statement is only true for following nature of accounts:

--Asset account,
--Expenses account,
--Contra Liability account
--Contra Equity account
--Contra Revenue account.

This means that say if ‘Accounts payable (a liability account-not in above list)’ is debited, it WILL DECREASE the balance. Likewise, credit to this account will INCREASE the balance.

The statement is False because the same does not apply to Liability accounts, Revenue accounts, Equity accounts, etc.

• #7

The statement is FALSE because the first step in the accounting cycle is the journalizing of transaction only.

Accounting Cycle goes like: Journalizing à Ledger posting à Trial Balances à Financial Statements

• #10
  The statement is FALSE because a journal entry contains one or more account being debited or credited. The total of debits of any journal entry equals the credit of that journal entry. Hence, if the whole journal entry got omitted to be posted to general ledger, the trial balance would STILL show equal debits and credit balances.

• #13
  The statement is FALSE.
  The difference between cost of assets and its salvage value is known as “Depreciable base”.
  The book value of any depreciable asset is the difference between Cost and its accumulated Depreciation.
  Book Value = Cost – Accumulated Depreciation thereon.