Accounting Equation
This is the basic accounting equation used to keep a company’s finances in balance.
What is assets equals liabilities plus owners equity?
What does the left side of a T account represent?
What is a debit?
What is a business transaction?
What is an activity that changes, assets, liabilities, or owner owners equity?
What is the name of the list that shows all accounts used by a business?
What is a chart of accounts?
The accounting equation must always stay in balance
What is true?
If a company buys equipment with cash, which two parts of the equation are affected?
What are assets increase? (Equipment) and assets decrease. (Cash)
What does the right side of a T account represent?
What is a credit?
If a business receives cash from the owner as an investment, what two accounts are affected?
What are cash (asset?) and owners capital.(owners equity.)
What do we call anything of value owned by a business?
What is an asset?
Debit’s always increase every type of account
What is false?(debits, increase assets and expenses, but decrease liabilities and equity)
When an owner invest more money into the business, which side of the accounting equation increase
What is owner’s equity? (and assets.)
In which direction (debit or credit) will you record an increase to an asset account?
What is a debit?
When a company pays cash for rent, which accounts are affected and how?
What are rent expense? (debit.) and cash (credit)
What is the term for money owed by the business to others?
What is a liability?
Paying cash for supplies decreases one asset and increases another
What is true?
If a business takes out a loan from the bank, which parts of the equation go up
What are assets?(cash) and liabilities (Loan payable)
in which direction (debit or credit) would you record an increase to a liability or owner’s equity account?
What is a credit?
If a business buys supplies on account, what does ”on account” mean?
What is buying now and paying later?
What is the name of the financial statement that shows assets, liabilities, and owners equity?
What is a balance sheet?
Revenue decreases owners
What is false? (revenue increases owners equity.)
If a company’s assets are worth $90,000 and liabilities are $30,000. How much is the owner’s equity?
What is $60,000? (because assets minus liabilities = owners equity equity)
If you buy supplies on account, which 2T accounts are affected and how
What are supplies? (Debit) and accounts payable. (Credit)
When a customer pays cash for a service, what happens to the accounting equation?
What are asset?(cash) increase, and owners equity. (revenue.) increases?
What is the process of recording business transactions in a journal called?
What is journalizing?
A T-account’s left side is always the credit side
What is false?(the left side is the debit side.)