Accounting 1 True or False

Keeping separate financial records for a business and for its owner's personal belongings is an application of the business entity accounting concept

True

When two asset accounts are changed in a transaction, there must be an increase and a decrease

True

Withdrawals are assets taken out of a business for the owners personal use

True

A negative amount for net work would reelect more debt then assets, something a creditor would favor

False

A transaction for the sale of goods or services results in a decrease in owner's equity

False

The most common type of withdrawal by an owner from a business is the withdrawal of cash

True

When items are bought and paid for at a future date, another way to state this is to say theses items are bought on account

True

When an owner withdraw cash from the business the transaction affects both assets and owners equity

True

After each transaction, the accounting equation must remain in balance

True

A withdrawal is an expense

False

Business ethics are the principles of right and wrong that guid an individual in making decisions.

False

Payments for advertising, equipment repairs utilities and rent are liabilities

False

The accounting equation is most often stated as Assets + Liabilities = Owner's Equity

False

An expense is a decrease in owners equity resulting from the operation of a business

True

Detailed information about changes in owner's equity is needed by owners and managers to make sound business decisions

True