True or False
The accounting equation is most often stated as Assets + Liabilities = Owner’s Equity
What is False?
assets=liabilities+owner's equity
Anything of value that is owned.
What is an asset?
Paid cash for telephone bill.
Cash will decrease or increase?
What is decrease?
Received cash from sales, increases which accounts?
What is cash and capital?
Total assets are the amount the owner has invested in the business.
What is false?
A withdrawal is an expense.
What is false?
A person or business to whom a liability is owed.
What is a creditor?
Paid cash for one month of insurance.
Prepaid insurance will increase or decrease?
What is increase?
Bought supplies on account from Smith Office Supplies. Which accounts increase?
What are supplies and accounts payable?
A business owned by one person.
What is a proprietorship?
Payments for advertising, equipment repairs, utilities, and rent are liabilities.
What is false?
These items are expenses
A business activity that changes assets, liabilities, or
owner’s equity
What is a transaction?
Received cash from owner as an investment.
The capital account will increase or decrease?
What is increase?
Paid cash to owner for personal use.
This transaction decreases which two accounts?
What is cash and capital?
A formal written document that describes the nature of a business and how it will operate.
What is a business plan?
After each transaction, the accounting equation must remain in balance.
What is true?
The use of ethics in making business decisions.
What is business ethics?
Sold services on account to Jane's Photography.
Accounts receivable and capital will increase or decrease?
What is increase?
Received cash on account from Computer Pros.
What is the transaction?
What is increase cash and decrease accounts receivable?
Financial reports that summarize the financial conditions and operations of a business.
What are financial statements?
When two asset accounts are changed in a transaction, there must be an increase and a decrease.
What is true?
The standards and rules that accountants follow while recording and reporting financial activities.
What is GAAP?
Paid cash on account to Smith Office Supplies.
Accounts payable will increase or decrease?
What is decrease?
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
What is owner's equity?
A planned process for providing financial information
that will be useful to management.
What is the accounting system?