Chapter 1

Indicate whether each of the following items is an asset, liability, or part of owner's equity: a) accounts receivable b) salaries and wages payable c) equipment d) supplies e) owner's capital f) notes payable g) accounts payable h) cash

a) asset b) liability c) asset d) asset e) owner's equity f) liability g) liability h) asset

Presented below are three business transactions. Determine the effect on assets, liabilities, and owner's equity of the following three transactions: a) invested cash in the business b) withdrawal of cash by owner c) received cash from a customer who had previously been billed for services performed

a) assets-increased, liabilities-no effect, owner's equity-increased b) assets-decreased, liabilities-no effect, owner's equity-decreased c) assets-no effect, liabilities-no effect, owner's equity-no effect

Indicate whether the following items would appear on the income statement, balance sheet, or owner's equity statement: a) notes payable b) advertising expense c) owner's capital d) cash e) service revenue

a) balance sheet b) income statement c) balance sheet and owner's equity statement d) balance sheet e) income statement

Classify each of the following items as owner's drawings, revenue, or expense: a) advertising expense b) service revenue c) insurance expense d) salaries and wages expense e) owner's drawings f) rent revenue g) utilities expense

a) expense b) revenue c) expense d) expense e) owner's drawings f) revenue g) expense