Exam 2: Analyzing Transactions: the Accounting Equation

Match the terms with the definitions. -Withdrawals that reduce owner's equity as a result of the owner taking cash or other assets out of the business for personal use.

Withdrawing cash from a business entity will result in an increase in owner's equity.

The accounting equation may be expressed as assets - liabilities = owner's equity.

Revenues received during an accounting period increase owner's equity.

An example of an expense is

The accounting equation shows the relationship among the three basic accounting elements-assets, revenues, and owner's equity.

Match the terms with the definitions. -An individual, association, or organization that engages in economic activities and controls specific economic resources.

Expenses that are incurred in operating the enterprise increase owner's equity.

Match the terms with the definitions. -The amount by which the business assets exceed the business liabilities.

If owner's equity and liabilities increased during the period, then assets must also have increased.

A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities.

Match the terms with the definitions. -Reports the profitability of business operations for a specific period of time.

Increases to owner's equity may be from

The statement of owner's equity shows the state of the business on a specific date.

Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would