Accounting Test 1

Each of the following is a business expense except a payment for ____.

Equipment

5. An economic event that causes a change in assets, liabilities, or owner's equity is called a(n) ____.

Equity

8. The increases or decreases in a specific item caused by business transactions are recorded in a(n) ____.

Expenses

"Assets + Liabilities = Owner's Equity" is another way to express the basic accounting equation.

False

An account is a record of only the increases in the balance of a specific item such as cash or equipment.

False

The owner's claims to the assets of a business are liabilities.

False

The total financial claims do not have to equal the total cost of the property.

False

Assets = Liabilities + Owner's Equity" is called the ____.

Financial claim

The total financial claims to the assets of a business are known as ____.

Investment

The owner's investment in the business is represented by the ____ account.

Liabilities

17. The owner's claim to the total assets of the business are called ____.

On account

When an owner takes cash or other assets out of a business for personal use, the transaction is called a(n) ____.

Owners Equity

12. ____ is the amount of money owed to a business's creditors.

Property

7. ____ are the prices paid for goods or services used to operate a business.

Revenue

A business transaction affects at least two accounts.

True

A creditor has a financial claim to the assets of a business.

True

After each transaction, the basic accounting equation should remain in balance.

True

One of the purposes of accounting is to provide financial information about property and the rights to that property.

True

The increases and decreases caused by business transactions are recorded in specific accounts.

True

Buying ____ is the same as buying on credit.

Withdrawal

A business transaction that involves a purchase on account is considered to be a(n) ____.

Credit Transaction

The free enterprise system is based on the right to own property.

True

If the creditor's financial claim to property totals $1,000 and the owner's financial claim to property totals $11,000, the property value is ____.

$12,000

13. A(n) ____ is money or property used to produce profit.

Account

9. Any property or item of value owned by a business is a(n) ____.

Accounting Equation

6. A person or business that sells property on credit, or any person or business to which money is owed, is called a(n)____.

Accounts Payable

All of the following account titles are asset titles except ____. Office Furniture, Accounts Payable, Cash in Bank, Equipment.

Accounts Payable

The purchase of a desk on account will increase Office Furniture and will also increase ____.

Accounts payable

. The total amount of money to be received in the future for goods or services sold on credit is the ____.

Accounts receivable

14. Anything of value that is owned or controlled by an individual or a business is called ____.

Asset

The account Accounts Receivable is an example of a(n) ____.

Asset

The word equities refers to claims against the assets of a business by ____.

Both creditors and owners

. Income earned from the sale of goods and services is called ____.

Business transaction

The legal right to property is ____.

Capital

If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two accounts affected are ____.

Cash in Bank and Paul Abdou, Capital

10. The debts of a business are called its ____.

Creditor