Chapter 1 - Accounting In Business

True or false: By definition, owner investments are cash or other assets that an owner or owners contributes to the company. True false question. True False

- True

From the following statements, identify the correct definition of a liability. Multiple choice question. A liability is something of value that a business owns. A liability refers to the claims of a business's owners. A liability is an amount owed to a creditor.

-A liability is an amount owed to a creditor.

Select all that apply Which of the statement(s) below define(s) an asset? (Check all that apply.) Multiple select question. A resource owned Resources with future benefits Resources controlled by the business An owner's claim A creditor's claim

-A resource owned -Resources with future benefits -Resources controlled by the business

Select all that apply Which statements below define a liability? (Check all that apply.) Multiple select question. Resources owned by the business An amount owed to a creditor An amount owed to the owner(s) of the business The company obligations to provide assets, products or services to others A creditor's claims against the assets of a business

-An amount owed to a creditor -The company obligations to provide assets, products or services to others -A creditor's claims against the assets of a business

Identify the correct definition of an asset. Multiple choice question. An asset is a resource that a business owns or controls. An asset refers to the claims of a business's owners. An asset is an amount owed to a creditor.

-An asset is a resource that a business owns or controls.

Which of the following correctly depicts the accounting equation? Multiple choice question. Assets + Liabilities = Equity Equity = Assets + Liabilities Assets = Liabilities + Equity Liabilities = Assets + Equity

-Assets = Liabilities + Equity

Identify the expanded accounting equation from the options below. Multiple choice question. Assets + Liabilities = Owner's Capital + Revenues - Expenses - Owner's Withdrawals Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses Assets = Liabilities - Owner's Capital + Revenues - Expenses - Owner's Withdrawals

-Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses

Given the statements below, choose the most accurate definition of owner withdrawals. Multiple choice question. Resources owned or controlled by a company Cost of assets or services used to earn revenues Assets an owner takes from the business for personal use Cash or other assets an owner puts into the business Assets earned from a company's earning activities

-Assets an owner takes from the business for personal use

Given the following lists of accounts, choose the list that contains only assets. Multiple choice question. Cash, Building, Accounts Payable, Land Cash, Building, Supplies, Accounts Receivable Supplies, Owner's Capital, Cash, Accounts Receivable Building, Accounts Payable, Equipment

-Cash, Building, Supplies, Accounts Receivable

Match each item on the left with its correct definition on the right. Expenses Revenues Owner Withdrawals Owner Investments

-Expenses Decrease equity and are the cost of providing products and services to customers. -Revenues increase equity from sales of products and services to customers. -Owner Withdrawals Decrease equity and are the outflows of assets from the company for the owner's personal use. -Owner Investments Increase equity and are assets an owner puts into the business.

Which of the following statements describes the effect of expenses on equity? Multiple choice question. Expenses cause owner's equity to decrease. Expenses cause owner's equity to increase. Expenses have little or no effect on owner's equity. Expenses decrease owner's equity only in the period they are paid.

-Expenses cause owner's equity to decrease.

Select all that apply The definition of expenses includes which of the following statements? (Check all that apply.) Multiple select question. Expenses decrease equity. Expenses are the costs necessary to earn revenue. Expenses are the assets earned from a company's earnings activities. Expenses are creditors' claims against the company.

-Expenses decrease equity. -Expenses are the costs necessary to earn revenue.

The expanded accounting equation is defined as: _________ = Liabilities + Owner's Capital + __________ - ___________ - Owner's Withdrawals.

-Field 1: Assets Field 2: Revenues or Revenue Field 3: Expenses or Expense

The correct definition of revenues is: Revenues ___________ (increase/decrease) ___________ (liabilities/equity) and are earned from the sale of products and services.

-Field 1: increase -Field 2: equity

The four major types of transactions that affect equity in a business are , , owner's withdrawals, and owner's investments. Note: enter one word for each blank.

-Field 1: revenues, revenue, or revenue earned -Field 2: expenses or expense

Select all that apply Which statements below define equity? (Check all that apply.) Multiple select question. It is computed as assets minus liabilities. It is the resources owned by the business. It is the accumulated revenues and owner's investments minus the accumulated expenses and withdrawals since the company began. It is the claims of the owner(s) on the assets of the business. It is the amount of debt owed to creditors of the business.

-It is computed as assets minus liabilities. -It is the accumulated revenues and owner's investments minus the accumulated expenses and withdrawals since the company began. -It is the claims of the owner(s) on the assets of the business.

Select all that apply Given the following list of accounts, identify which are classified as assets. Select all that apply. Multiple select question. Land Cash Supplies Accounts Receivable Owner's Withdrawals Owner's Capital Building Wages Payable

-Land -Cash -Supplies -Accounts -Receivable -Building

Which of the following statements is correct regarding owner investments? Multiple choice question. Owner investments cause owner equity to increase. Owner investments will cause assets to decrease. Owner investments do not affect owner equity. Owner investments cause creditor debt to rise.

-Owner investments cause owner equity to increase.

Select all that apply Given the accounts below, choose all that affect equity. (Check all answers that apply.) Multiple select question. Revenues Owner's Capital Owner's Investments Accounts Payable Expenses Cash Mortgage Payable Owner's Withdrawals

-Revenues -Owner's Capital -Owner's Investments -Expenses -Owner's Withdrawals

Which of the following statements is correct regarding revenues? Multiple choice question. Revenues cause equity to decrease. Revenues will cause assets to decrease. Revenues cause equity to increase. Revenues do not affect equity.

-Revenues cause equity to increase.

Select all that apply The definition of revenues includes which of the following statements? (Check all that apply.) Multiple select question. Revenues are creditor's claims against the company. Revenues are resources owned or controlled by a company. Revenues increase equity. Revenues are the sales of products or services to customers by a business.

-Revenues increase equity. -Revenues are the sales of products or services to customers by a business.

Given the following lists of accounts, choose the list that contains only liabilities. Multiple choice question. Equipment, Accounts Payable, Mortgage Payable Accounts Payable, Owner's Withdrawal, Mortgage Payable Cash, Building, Supplies, Accounts Receivable Taxes Payable, Accounts Payable, Wages Payable

-Taxes Payable, Accounts Payable, Wages Payable

Select all that apply Which statements below define a liability? (Check all that apply.) Multiple select question. An amount owed to the owner(s) of the business The company obligations to provide assets, products or services to others A creditor's claims against the assets of a business An amount owed to a creditor Resources owned by the business

-The company obligations to provide assets, products or services to others -A creditor's claims against the assets of a business -An amount owed to a creditor

Select all that apply Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply. Multiple select question. The equation applies to all business transactions. The relation of assets, liabilities and equity is reflected in the equation. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation reflects the fact that, at any point in time, total revenues will always equal total liabilities and assets. The equation states that Revenues - Expenses = Assets. The equation states that Assets = Liabilities + Equity.

-The equation applies to all business transactions. -The relation of assets, liabilities and equity is reflected in the equation. -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. -The equation states that Assets = Liabilities + Equity.

Which of the following statements best represents the reason for the accounting equation? Multiple choice question. The equation monitors the legal agreements made with creditors and what is owed to them at any point in time. The total of everything owned by a business must always equal the total of what the business owes to creditors and owners. The owners' rights are equal to the creditors' rights. The equation may sometimes be out of balance at the end of a year.

-The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

True or false: Owner withdrawals are resources taken from the business for personal use. True false question.TrueFalse

-True

Select all that apply Given the following list of accounts, identify which are classified as liabilities. (Check all that apply.) Multiple select question. Owner's Withdrawals Wages Payable Accounts Payable Accounts Receivable Cash Notes Payable Owner's Capital Taxes Payable

-Wages Payable -Accounts Payable -Notes Payable -Taxes Payable

Which of the statements correctly represents the accounting equation? Multiple choice question. A business's income will always equal what it owes to creditors. What a business owns will always equal the owners' ownership in the business. What a business owns will always equal what it owes to creditors and owners. What the business owns will always equal what it owes creditors.

-What a business owns will always equal what it owes to creditors and owners.

Other names for equity in a sole proprietorship include: Multiple choice question. net assets and residual equity owner's claims and owner's payables liabilities and investments

-net assets and residual equity

Owner withdrawals cause a(n) (increase/decrease) ________________ in owner's equity and are recorded directly in owner's (capital/withdrawal/equity) ______________.

Field 1: decrease Field 2: withdrawal

Owner investments cause a(n) (increase/decrease) ___________ in equity and are entered directly in Owner's ____________ (Capital/Withdrawals/Revenue).

Field 1: increase Field 2: Capital

Describe the order in which a company prepares financial statements. Income Statement Statement of Owner's Equity Statement of cash flows Balance Sheet

Income Statement Statement of Owner's Equity Balance Sheet Statement of Cash Flows

True or False: The date line of a balance sheet depicts a specific day and not a period of time. True false question. True False

True