Question 1

The basic accounting equation cannot be restated as

Accepted Answer

A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity. 
A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity.

Question 2

If Haircut 101 pays its utility bill on the day it is received, then

Accepted Answer

A)  assets will decrease. 
B)  liabilities will increase. 
C)  owner's equity will increase. 
D)  expenses will decrease. 
A)  assets will decrease. 
B)  liabilities will increase. 
C)  owner's equity will increase. 
D)  expenses will decrease.

Question 3

Which of the following decreases owner's equity?

Accepted Answer

A)  Revenues and expenses 
B)  Investments by owners and revenues 
C)  Drawings and expenses 
D)  Investments by owners and drawings 
A)  Revenues and expenses 
B)  Investments by owners and revenues 
C)  Drawings and expenses 
D)  Investments by owners and drawings

Question 4

If total liabilities increased by $6,000, then

Accepted Answer

A)  assets must have decreased by $6,000. 
B)  owner's equity must have increased by $6,000. 
C)  assets must have increased by $6,000, or owner's equity must have decreased by $6,000. 
D)  assets and owner's equity each increased by $3,000. 
A)  assets must have decreased by $6,000. 
B)  owner's equity must have increased by $6,000. 
C)  assets must have increased by $6,000, or owner's equity must have decreased by $6,000. 
D)  assets and owner's equity each increased by $3,000.

Question 5

Jessica Chute, the owner of Watauga Home Health Services, withdrew cash from the business for personal use. The drawing

Accepted Answer

A)  decreases assets. 
B)  increases expenses. 
C)  increases revenue. 
D)  decreases net income. 
A)  decreases assets. 
B)  increases expenses. 
C)  increases revenue. 
D)  decreases net income.

Question 6

If Miller's Plumbing provides services and sends the customer a bill, then Miller's

Accepted Answer

A)  assets will increase. 
B)  liabilities will increase. 
C)  owner's equity will decrease. 
D)  liabilities will decrease. 
A)  assets will increase. 
B)  liabilities will increase. 
C)  owner's equity will decrease. 
D)  liabilities will decrease.

Question 7

The withdrawal of cash from the business by the owner decreases assets and owner's equity.

Accepted Answer

A) True 
 B)False

Question 8

Maria Martinez decides to open a cleaning and laundry service near the local college campus that will operate as a sole proprietorship. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in owner's equity.
Transactions
(1) Maria Martinez invests $25,000 in cash to start a cleaning and laundry business on June 1.
(2) Purchased equipment for $5,000 paying $3,500 in cash and the remainder due in 30 days.
(3) Purchased supplies for $1,200 cash.
(4) Received a bill from College Clarion for $200 for advertising in the campus newspaper.
(5) Cash receipts from customers for cleaning and laundry amounted to $2,600.
(6) Paid salaries of $600 to student workers.
(7) Billed the Tiger Tennis Team $480 for cleaning and laundry services.
(8) Paid $200 to College Clarion for advertising that was previously billed in Transaction 4.
(9) Maria Martinez withdrew $1,300 from the business for living expenses.
(10) Incurred utility expenses for month on account, $500.

Accepted Answer

The answer of Maria Martinez decides to open a cleaning...

Question 9

Both owner investments and revenues increase total assets and owner's equity.

Accepted Answer

A) True 
 B)False

Question 10

Transactions are the ______________ events of a business that are recorded by accountants.

Accepted Answer

The answer of Transactions are the ______________ events of a...

Question 11

The purchase of office equipment on credit increases total assets and total liabilities.

Accepted Answer

A) True 
 B)False

Question 12

Owner's drawings are an expense of the business.

Accepted Answer

A) True 
 B)False

Question 13

The expanded accounting equation adds _______________, __________________, and ______________ to the basic accounting equation.

Accepted Answer

revenues,

Question 14

If Miller's Plumbing receives a bill for repair of one of its trucks, then

Accepted Answer

A)  assets will decrease. 
B)  assets will increase. 
C)  owner's equity will decrease. 
D)  liabilities will decrease. 
A)  assets will decrease. 
B)  assets will increase. 
C)  owner's equity will decrease. 
D)  liabilities will decrease.

Question 15

Accepted Answer

The answer of  ...

Question 16

For each of the following, indicate whether the transaction increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and owner's equity using the following format.
Assets = Liabilities + Owner's Equity
1. Made an investment to start the business.
2. Billed customers for services performed.
3. Purchased equipment on account.
4. Withdrew cash for personal use.
5. Paid for equipment purchased in number 3 above.

Accepted Answer

The answer of For each of the following, indicate whether...

Question 17

Accountants record both internal and external transactions.

Accepted Answer

A) True 
 B)False

Question 18

Expenses are the costs incurred in the process generating revenue.

Accepted Answer

A) True 
 B)False

Question 19

All of the following accounts are assets except

Accepted Answer

A)  Owner's Capital 
B)  Accounts Receivable 
C)  Cash 
D)  Equipment 
A)  Owner's Capital 
B)  Accounts Receivable 
C)  Cash 
D)  Equipment

Question 20

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

Accepted Answer

A) True 
 B)False

The basic accounting equation cannot be restated as

If Haircut 101 pays its utility bill on the day it is received, then

Which of the following decreases owner's equity?

If total liabilities increased by $6,000, then

Jessica Chute, the owner of Watauga Home Health Services, withdrew cash from the business for personal use. The drawing

If Miller's Plumbing provides services and sends the customer a bill, then Miller's

The withdrawal of cash from the business by the owner decreases assets and owner's equity.

Both owner investments and revenues increase total assets and owner's equity.

Transactions are the ______________ events of a business that are recorded by accountants.

The purchase of office equipment on credit increases total assets and total liabilities.

Owner's drawings are an expense of the business.

The expanded accounting equation adds _, , and __ to the basic accounting equation.

If Miller's Plumbing receives a bill for repair of one of its trucks, then

Accountants record both internal and external transactions.

Expenses are the costs incurred in the process generating revenue.

All of the following accounts are assets except

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

Welcome to Accounting

The Recording Process: Debits and Credits

The Recording Process: the Journal, the Ledger, and the Trial Balance

Adjusting the Accounts and Preparing an Adjusted Trial Balance

Completing a Worksheet and Completing the Accounting Cycle

Merchandising Companies: Purchases Perpetual

Merchandising Companies: Sales Perpetual

Merchandising Companies: Worksheets and Financial Statements Perpetual

Special Journals

Inventory

Cash, Banking, and Internal Controls

Payroll Accounting: Employee Taxes and Records

Payroll Accounting: Employer Taxes and Records

Filters

Exam 2: The Accounting Equation and Transaction Analysis

The basic accounting equation cannot be restated as

If Haircut 101 pays its utility bill on the day it is received, then

Which of the following decreases owner's equity?

If total liabilities increased by $6,000, then

Jessica Chute, the owner of Watauga Home Health Services, withdrew cash from the business for personal use. The drawing

If Miller's Plumbing provides services and sends the customer a bill, then Miller's

The withdrawal of cash from the business by the owner decreases assets and owner's equity.

Both owner investments and revenues increase total assets and owner's equity.

Transactions are the ______________ events of a business that are recorded by accountants.

The purchase of office equipment on credit increases total assets and total liabilities.

Owner's drawings are an expense of the business.

The expanded accounting equation adds _______________, __________________, and ______________ to the basic accounting equation.

If Miller's Plumbing receives a bill for repair of one of its trucks, then

Accountants record both internal and external transactions.

Expenses are the costs incurred in the process generating revenue.

All of the following accounts are assets except

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

Welcome to Accounting

The Recording Process: Debits and Credits

The Recording Process: the Journal, the Ledger, and the Trial Balance

Adjusting the Accounts and Preparing an Adjusted Trial Balance

Completing a Worksheet and Completing the Accounting Cycle

Merchandising Companies: Purchases Perpetual

Merchandising Companies: Sales Perpetual

Merchandising Companies: Worksheets and Financial Statements Perpetual

Special Journals

Inventory

Cash, Banking, and Internal Controls

Payroll Accounting: Employee Taxes and Records

Payroll Accounting: Employer Taxes and Records

Filters

The expanded accounting equation adds _, , and __ to the basic accounting equation.