Chapter 3 Quiz- Accounting – Flashcards
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accounting equation
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assets=liabilities+owner's equity
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account
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the increases or decreases in a specific item caused by business transactions are recorded in an
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accounts payable
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amount of money owed to the creditors of a business
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accounts receivable
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the total amount of money to be received in the future for goods and services sold on credit
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asset
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any property or item of value owned by a business
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business transaction
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an economic event that causes a change in assets, liabilities, or owner's equity
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capital
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refers to the dollar amount of the owner's equity in the business
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creditor
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a person or business that sells property on credit, or any person or business to which money is owed
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equities
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the total financial claims to the assets of a business
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expenses
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costs of goods and services used to operate a business
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liabilities
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the creditor's claims to the assets of the business
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on account
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the same as buying on credit
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owner's equity
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owner's claim to the total assets of the business
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property
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anything of value that is owned or controlled
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revenue
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income earned from the sale of goods and services
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withdrawal
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when the owner takes cash or other assets from the business for personal use
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false
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when you buy property on account, you acquire all of its property rights, true or false
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true
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one of the purposes of accounting is to provide financial information about property and the rights of a business to that property, true or false
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false
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a person who has control over but does not own an time of property has a legal right to use that item, true or false
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true
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both businesses and individuals may own and control property, true or false
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false
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the creditor's financial claims minus the owner's financial claim to an item of property always equals the total cost of the property, true or false
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true
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the accounting equation should remain in balance after each transaction, true or false
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true
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a business transaction affects at least two accounts, true or false
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false
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assets+liabilities=owner's equity is another way to express the accounting equation, true or false
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true
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the incases and decreases caused by business transactions are recorded in specific accounts, true or false
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true
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the free enterprise system is based on the right to own property, true or false
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false
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the owner's personal financial transactions are part of the business's records, true or false
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true
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the total financial claims to the assets of a business are referred to as equities, true or false
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false
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the owner's claims to the assets of a business are liabilities, true or false
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false
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when a business transaction occurs, the financial position of the business always changes, true or false
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true
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a creditor has a financial claim to the assets of a business, true or false
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false
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an account is a record of only the increases in the balance of a specific item such as cash or equipment, true or false
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false
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the total financial claims do not have to equal the total cost of the property, true or false
