WGU CYC1 Chapter 02

If liabilities are $4,000 and owner's equity is $15,000, assets are $9,000. $15,000. $19,000. $4,000.

$19,000

Total assets of Douglas Fuhr Furniture Co. are $36,000 and the total liabilities are $12,000. What is the amount of the owner's equity? $36,000 $24,000 $48,000 $6,000

$24,000

A withdrawal of funds by the owner for personal use is considered a business expense. True False

False

Revenue is recorded when cash is collected from charge-account clients. True False

False

The net income or net loss for the period is shown on both the income statement and the balance sheet. True False

False

When cash is collected from accounts receivable, the total amount of assets increases. True False

False

Withdrawals by the owner are reported on the income statement. True False

False

A business transaction is a financial event that affects the resources of a business. True False

True

A creditor's claim against the firm's property lasts until the debt is paid. True False

True

Al Dunn Bakery bought a new oven for $1,380. Al paid $300 as a cash down payment and will pay the balance in 30 days. Total assets increased by $1,080. True False

True

Assets alays equal debts of the business plus the financial interest of the owner. True False

True

Assets always equal debts of the business plus the financial interest of the owner. True False

True

The entire process of analyzing, recording, and reporting business transactions is based on the fundamental accounting equation. True False

True

The statement of owner's equity is prepared before the balance sheet so that the ending capital balance is available. True False

True

The statement of owner's equity is prepared before the balance sheet so that the ending capital balance is available. True False

True

The rent paid for future months is a(n) a] asset. b] liability. c] expense. d] revenue.

a] asset.

When equipment is purchased on credit, a] assets and liabilities increase. b] assets increase and liabilities decrease. c] assets and owner's equity increase. d] assets and expenses increase.

a] assets and liabilities increase.

Assets and liabilities are reported on a] the balance sheet. b] the income statement. c] the statement of owner's equity. d] both the balance sheet and the income statement.

a] the balance sheet.

Assets and liabilities are reported on a] the balance sheet. b] the income statement. c] the statement of owner's equity. d] both the balance sheet and the income statement.

a] the balance sheet.

A net loss results a] when expenses are greater than revenue. b] when assets are greater than liabilities. c] when revenue is greater than expenses. d] when expenses are greater than assets.

a] when expenses are greater than revenue.

When equipment is purchased for cash, a] assets decrease and expenses increase. b] one asset increases and another asset decreases. c] assets and owner's equity increase. d] assets increase and liabilities decrease.

b] one asset increases and another asset decreases.

Owner's equity is a] the amount taken out of a business by the owner for personal use. b] the financial interest of the owner of a business. c] the amount the owner invested in the business. d] the revenues less the expenses.

b] the financial interest of the owner of a business.

Which financial statement is a representation of the accounting equation? a] Income Statement b] Statement of Owner's Equity c] Balance Sheet d] Profit and Loss Statement

c] Balance Sheet

Ginger Yale Ice Company receives money from a customer on account. Recording this transaction will a] increase Accounts Receivable b] increase G. Yale, Capital c] decrease Accounts Payable d] increase Cash

d] increase Cash

If the income statement covered a six-month period ending on November 30, 2010, the third line of the income statement heading would read a] Month Ended November 30, 2010. b] November 30, 2010. c] Six-month Period Ended November 30, 2010. d] Month of November, 2010.

c] Six-month Period Ended November 30, 2010.

An Income Statement is all of the following except a] a formal report of business operations. b] a profit and loss statement. c] a statement of revenues less withdrawals and expenses. d] a statement of income and expenses.

c] a statement of revenues less withdrawals and expenses.

he owner's investment or equity in a business is called a] cash b] drawing c] capital d] accounts payable

c] capital

The owner's investment or equity in a business is called cash drawing capital accounts payable

capital