Economic events that require recording in the financial statements are called accounting
transactions.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
2. Revenue increases stockholders’ equity and should be recorded whenever cash is received from
customers.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
3. Collection on an account receivable will increase both cash and accounts receivable.
Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA
4. The payment of a liability decreases both cash and accounts payable.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective,
AICPA FC: Measurement, AICPA PC: None, IMA: FSA