Chapter 3: Property and Financial Claims
Accounts Receivable is an example of a liability
False
An account is a record of only the increases in the balance of a specific item such as cash or equipment.
False
Income earned from the sale of goods and services is called profit
False
Revenues are the prices paid for goods or services used to operate a business.
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
Revenue
Income earned from the sale of goods or services
Investments
Money or other property paid out in order to produce profit.
Is accounts payable an account category
No
Anything of value that is owned or controlled by an individual or a business is called ____.
Property
Assets
Property or items of value owned by a business
Equities
The accounting term for the financial claims to these assets
Accounts Payable
The amount owed, or payable, to the creditors of a business.
Creditor
The business or person selling you the item on credit is
Expense
The cost of products or services used to operate a business.
Liabilities
The creditor's claims to the assets of the business
Owners Equity
The owner's claims to the assets of the business
Accounts Receivable
The total amount of money owed to a business—money to be received later because of the sale of goods or services on credit.
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
Any property or item of value owned by a business is an asset
True
Free enterprise system is based on the right to own and sell property.
True
The debts of a business are called its liabilities
True
The increases and decreases caused by business transactions are recorded in specific accounts.
True
Credit
When you buy something and agree to pay for it later, you are buying on
Financial Claim
A legal right to an item.
Business Traction
An economic event that causes a change— either an increase or a decrease—in assets, liabilities, or owner's equity.
Accounting Equation
What is ASSETS = LIABILITIES + OWNER'S EQUITY
On Account
When a business buys an item on credit, it is buying
Withdraw
When an owner takes cash or other assets out of a business for personal use, the transaction
Account
A subdivision under assets, liabilities, or owner's equity.
Property
Anything of value that a person or business owns and therefore controls.
The owner's investment in the business is represented by the ____ account.
Capital
Each of the following is a business expense except a payment for
Cash Withdraw
If John Smith deposits $30,000 in a checking account in the name of his business, the two accounts affected are ____.
Cash in bank and John Smith, Capital
A business transaction that involves a purchase on account is considered to be a(n) ____.
Credit transaction
Financial Claims are claims to assets by
Creditors and Owners
