A cash shortage is entered as a debit to Cash Short and Over and a credit to Cash.

A cash shortage is entered as a debit to Cash Short and Over and a credit to Cash.
 a. True
   b. False
   Indicate whether the statement is true or false

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(Q. 2) Which of the following is a TRUE statement about the matching principle?
 
  A) The matching principle states that expenses should be recognized when cash is paid for an item.
  B) The matching principle states that assets must match, or equal, liabilities plus shareholders' equity.
  C) The matching principle states that expenses incurred should be recognized in the same period as revenues earned.
  D) The matching principle states that, after adjustments, expenses must equal revenues in each accounting period.

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(Q. 3) Morris Lest began his business, Graters, Inc with 10,000 of his savings. Graters borrowed 5,000 from Baroque Bank. Graters bought 3,000 worth of graters. The rent for the store is 1,000 per month.
 
  The first month's sales were 4,000 for inventory valued at 2,500. All of the transactions were in cash. Identify the get/give transactions above, and determine if there is an increase or decrease in assets, liabilities, or shareholders' equity.
 
  Get Give Total Assets Total Liabilities Shareholders' Equity
  Contributed capital Retained earnings
  Ex. Cash Ownership +10,000 +10,000

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(Q. 4) Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for 25,000 . What is the amount of the sales discount allowable?
 a. 260
  b. 500
  c. 460
  d. 150

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(Q. 5) State the most applicable accounting rule for each of the following situations. An accounting rule can be a principle, assumption, constraint, or information characteristic.
 
  1. All purchases and expenses are recorded at the amount paid.
  2. South Seas records items imported from Tahiti in U.S. dollars.
  3. The owner intends to run South Seas for an indefinite period of time.
  4. Jem's Jewelers sold a 5,000 diamond engagement ring on account and recorded it as a sale.
  5. Inventory purchased last month and sold this month was deducted as a cost on this month's income statement.

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(Q. 6) A fraud is a deliberate act or untruth intended to obtain unfair or unlawful gain.
  Indicate whether the statement is true or false