Accounting part 2
A balance sheet may be prepared on any date.
T
A transaction for the sale of goods or services results in an increase in owner's equity
T
A transaction that increases accounts receivable and increases owner's equity is a sale on account
T
A withdrawal is a transaction that decreases cash and decreases owner's equity
T
Few businesses need to prepare a balance sheet every day.
T
Regardless of when payment is made when services are sold, the revenue should be recorded at the time of the sale.
T
The accounts on the left side of the accounting equation are reported on the left side of the balance sheet
T
The balance sheet reports the balances of the asset, liability, and owner's equity accounts.
T
The heading of the balance sheet contains the name of the business, name of the report, and the date of the report.
T
When a company makes payments for advertising and charitable contributions, the company is paying expenses
T
When cash is paid to the owner for personal use, assets decrease and owner's equity decreases
T
When cash is received for services performed, the asset account Cash is increased and owner's equity account is decreased
T
Accounts Receivable is a liability account
F
An owner may withdraw only cash from a business; other assets must remain in the business at all times for the accounting equation to be in balance
F
Asset accounts are shown on the right side of the balance sheet
F
Cash is increased by expenses
F
Owner's Equity is decreased by a sale on account
F
Owner's equity accounts are presented above liability accounts on the balance sheet.
F
Recording an expense transaction in an accounting equation increases liabilities
F
The accounts on the left side of the accounting equation include the liabilities and owner's equity.
F
The total of the left side of the balance sheet is equal to the right side, and these totals need not be on the same line.
F
Three transactions that affect the owner's equity are receiving cash on account, paying expenses, and paying for supplies bought on account
F
When a company receives cash from a customer for a prior sale, the transaction decreases the cash account balance and increases the accounts receivable balance.
F
When cash is paid for expenses, the business has less cash; therefore the asset account Cash is decreased and the owner's equity account is increased.
F