Accounting Chapter 3
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
Anything of value that is owned or controlled by an individual or a business is called ____.
Property
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
The debts of a business are called its liabilities
True
The increases and decreases caused by business transactions are recorded in specific accounts.
True
free enterprise system is based on the right to own and sell property.
True
When an owner takes cash or other assets out of a business for personal use, the transaction is called a(n) ____.
Withdrawal
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
Each of the following is a business expense except a payment for ____.
cash withdrawal
Which of the following is NOT an account category
Accounts Payable
"Assets = Liabilities + Owner's Equity" is called the ____.
Accounting Equation
The total amount of money to be received in the future for goods or services sold on credit is the ____.
Accounts Receivable
Match each account with it's correct account category
Accounts Receivable: Assets Dennis Nisbet, Capital: Owner's Equity Accounts Payable: Liabilities
____ is the amount of money owed to a business's creditors.
Accounts payable
An economic event that causes a change in assets, liabilities, or owner's equity is called a(n) ____.
Business Transaction
The owner's investment in the business is represented by the ____ account.
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