Accounting part 2

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A balance sheet may be prepared on any date.

T

A transaction for the sale of goods or services results in an increase in owner's equity

T

A transaction that increases accounts receivable and increases owner's equity is a sale on account

T

A withdrawal is a transaction that decreases cash and decreases owner's equity

T

Few businesses need to prepare a balance sheet every day.

T

Regardless of when payment is made when services are sold, the revenue should be recorded at the time of the sale.

T

The accounts on the left side of the accounting equation are reported on the left side of the balance sheet

T

The balance sheet reports the balances of the asset, liability, and owner's equity accounts.

T

The heading of the balance sheet contains the name of the business, name of the report, and the date of the report.

T

When a company makes payments for advertising and charitable contributions, the company is paying expenses

T

When cash is paid to the owner for personal use, assets decrease and owner's equity decreases

T

When cash is received for services performed, the asset account Cash is increased and owner's equity account is decreased

T

Accounts Receivable is a liability account

F

An owner may withdraw only cash from a business; other assets must remain in the business at all times for the accounting equation to be in balance

F

Asset accounts are shown on the right side of the balance sheet

F

Cash is increased by expenses

F

Owner's Equity is decreased by a sale on account

F

Owner's equity accounts are presented above liability accounts on the balance sheet.

F

Recording an expense transaction in an accounting equation increases liabilities

F

The accounts on the left side of the accounting equation include the liabilities and owner's equity.

F

The total of the left side of the balance sheet is equal to the right side, and these totals need not be on the same line.

F

Three transactions that affect the owner's equity are receiving cash on account, paying expenses, and paying for supplies bought on account

F

When a company receives cash from a customer for a prior sale, the transaction decreases the cash account balance and increases the accounts receivable balance.

F

When cash is paid for expenses, the business has less cash; therefore the asset account Cash is decreased and the owner's equity account is increased.

F


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