Transactions 1
Which two accounts are affected when you receive cash as an owner investment
Assets (cash) and Owners Equity
What is the Accounting Equation?
Assets= Liabilities + Owners Equity
What is an asset?
Any resource owned or controlled by a business or an economic entity that has value
The accounting equation is most often stated as Assets + Liabilities = Owner's Equity
True
Planning, recording, analyzing, and interpreting financial information is known as. . . . ?
Accounting
How does paying cash affect the accounting equation?
Decrease in Assets
Is accounts payable a liability or asset?
Liability
The amount of money that would be returned to a company's shareholders is known as. . . . ?
Owners Equity
After each transaction, the accounting equation must remain in balance-
True
A business owned entirely by one person is called a…?
Proprietorship
How does receiving cash affect the accounting equation?
Increase in asset
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
Owners Equity
What is a liability?
A thing for which someone is responsible, especially a debt or financial obligation
A withdrawal is an expense
False
A formal written document that describes the nature of a business and how it will operate is known as?
Business Plan
Which two accounts are affected when you pay cash for supplies?
Decrease in cash, increase in supplies
The amount remaining after the value of owners equity is subtracted from the value of all assets.
Liabilities
What is prepaid insurance
Payments that are made by individuals and businesses to their insurers in advance for insurance services or coverage
Payments for advertising, equipment repairs, utilities, and rent are liabilities.
True
The account used to summarize the owners equity in the business is called…?
Capital Account
Paid cash for postage. Which accounts are affected?
Cash and Owners Equity
If Assets is $10,000 and Liabilities is $3,000, How much is Owners Equity?
$7,000
A detailed record of all the money that a business or a person receives and spends is an _____
Account
A transaction for the sale of goods or services results in a decrease of owners equity
False
The standards and rules that accountants follow while recording and reporting financial data is referred to as…?
GAAP