question

Recording and reporting a business's financial information separately from the owner's financial information is an application of the accounting concept ____.

answer

Business Entity

question

The amount remaining after the value of all liabilities is subtracted from the value of all assets is ____.

answer

owner's equity

question

The accounting equation is most often stated as ____.

answer

Assets = Liabilities + Owner's Equity

question

In the United States, recording business transactions in dollars is an application of the accounting concept ____.

answer

Unit of Measurement

question

The account used to summarize the owner's equity in a business is ____.

answer

Capital

question

If cash is increased by $2,000.00 when the owner invests cash in the business, then capital is ____.

answer

increased by $2,000.00

question

When a transaction changes both sides of the accounting equation, ____.

answer

an increase on the left side must equal an increase on the right side

question

When a business pays cash for supplies, ____

answer

assets increase and assets decrease

question

When cash is decreased and supplies are increased by an equal amount, ____.

answer

liabilities and capital are not changed

question

When a transaction changes only one side of the equation, if one account is increased, the other account on the same side must ____.

answer

decrease

question

Prepaid Insurance is ____.

answer

an asset account

question

Buying items and paying for them at a future date is ____.

answer

a common business practice

question

When a business buys supplies on account, assets ____.

answer

increase

question

When supplies are bought on account, the business to whom money is owed is ____.

answer

a liability account

question

When cash is paid on account, ____.

answer

one asset and one liability are changed

question

Total assets are $22,000.00. Supplies are bought on account for $1,500.00. The total assets are now ____.

answer

$23,500.00

question

Total assets are $19,500.00. Cash is paid for $1,500.00 of supplies. The total assets are now ____.

answer

$19,500.00

question

To start a business, the owner invested $8,000.00, bought $1,500.00 of supplies, insurance coverage of $500.00, and bought an additional $300.00 of supplies on account. Total assets are ____.

answer

$8,300.00

question

A business has total cash of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. The balance of the cash account is now ____.

answer

$26,750.00

question

A business has total assets of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. Total assets are now ____.

answer

$28,700.00

question

A transaction that increases accounts receivable and increases owner's equity is ____.

answer

revenue

question

A transaction that increases cash and decreases owner's equity is ____.

answer

none of the above

question

Cash is increased by ____.

answer

revenue

question

The asset most commonly withdrawn by business owners is ____.

answer

cash

question

A decrease in owner's equity resulting from the operation of a business is ____.

answer

an expense

question

A record summarizing all the information pertaining to a single item in the accounting equation is ____.

answer

an account

question

In a T account, the debit side is ____.

answer

the left side

question

The right side of a T account is the ____.

answer

credit side

question

If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is ____.

answer

decreased

question

The normal balance side of an asset account is the ____.

answer

debit side

question

When the owner invests cash in a business, the owner's capital account is ____.

answer

increased by a credit

question

When a business pays for insurance, Prepaid Insurance is ____.

answer

increased by a debit

question

When a business buys an asset on one date and agrees to pay on a later date, the transaction is ____.

answer

on account

question

When a business pays cash on account, a liability account is ____.

answer

decreased by a debit

question

When cash is received from sales, the change in the owner's equity is usually ____.

answer

recorded in a separate revenue account

question

When a business receives revenue, Sales is ____.

answer

increased by a credit

question

The amount paid for rent is recorded as a debit to ____.

answer

Rent Expense

question

When cash is paid for rent, Rent Expense is ____.

answer

increased by a debit

question

When the owner withdraws cash, the owner's drawing account is ____.

answer

increased by a debit

question

A drawing account has a normal ____.

answer

debit balance and is increased by a debit

question

The values of all things owned (assets) are on the accounting equation's ____.

answer

left side

question

The values of all equities or claims against the assets (liabilities and owner's equity) are on the accounting equation's ____.

answer

right side

question

An amount recorded on the left side of a T account is ____.

answer

a debit

question

The normal balance side of any liability account is ____.

answer

the credit side

question

The normal balance side of an owner's capital account is ____.

answer

the credit side

question

Debits must equal credits ____.

answer

in all transactions

question

Decreases in an asset account are shown on a T account's ____.

answer

the credit side

question

Decreases in any liability account are shown on a T account's ____.

answer

debit side

question

Increases in an owner's capital account are shown on a T account's ____.

answer

credit side

question

Increases in a revenue account are shown on a T account's ____.

answer

credit side

question

The normal balance side of any revenue account is ____.

answer

credit side

question

The normal balance side of any expense account is ____.

answer

debit side

question

When services are sold on account for $500.00, ____.

answer

Sales is increased with a credit and Accounts Receivable is increased with a debit

question

When $1,500.00 cash is received on account, ____.

answer

Accounts Receivable is decreased with a credit and Cash is increased with a debit

question

A sale on account ____.

answer

increases an owner's equity account and increases an asset account

Accounting II Practice Test Multiple Choice Part 1 ; 2 – Flashcards

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