ACC 1.2

Which of the following is a true statement? a)A cash revenue is an economic benefit that will cause assets and retained earnings to increase. b) A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. c) A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease. d) All of the answers represent true statements.

-A cash revenue is an economic benefit that will cause assets and retained earnings to increase. -A cash expense is an economic sacrifice that will cause assets and retained earnings to decrease. -A cash dividend is a transfer of assets from a business to its owners that will cause the assets and retained earnings of the business to decrease.

Which of the following is an accurate definition of the term asset? a) An obligation to creditors b) A resource that will be used to produce revenue c) A transfer of wealth from the business to its owners d) A sacrifice incurred from operating the business

A resource that will be used to create revenue

Which of the following is not a source of assets? a) Creditors b) Investors c) Operations d) All of the answers represent sources of assets.

creditors, investors, and operations

If total assets increase then a) liabilities must decrease and retained earnings must increase. b) common stock must increase and retained earnings must decrease. c) liabilities, common stock, or retained earnings must increase. d) liabilities, common stock, or retained earnings must decrease.

liabilities, common stock, or retained earnings must increase.

Liabilities represent obligations to repay debts. may increase when assets increase. have priority in business liquidations. All of the answers are qualities of liabilities.

represent obligations to repay debts. may increase when assets increase. have priority in business liquidations.