Louisiana State University, Shreveport ACCT 701 CHAPTER 3 1)Credits are entries on the left side of a T-account

7. If the trial balance has equal debit and credit totals, it cannot contain any errors.
8. Closing entries are necessary to reduce the balances of revenue, expense, and Dividends accounts to zero so they are ready to receive data for the next accounting period.
9. The cash basis is more generally accepted than the accrual basis because it provides a better matching of revenues and expenses.
10. The accumulated depreciation account is a contra-asset account that shows the amount of depreciation for the current year only.
11. Credit cards are of two types-nonbank credit cards ( Such as American Express) and bank credit cards ( such as VISA).
12. When companies offer trade discounts, the gross selling price (gross invoice

price) at which the sales is recorded is equal to the list price minus any trade discounts.

13. The price-earnings ratio equals the current market price per share of

common stock divided by EPS. The price-earnings ratio indicates how confident investors feel about a stock's future income potential as compared to other stocks.