accounting exam1 – Flashcards
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1. The accounting equation may be expressed as
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owner's equity = assets ? liabilities.
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2. Jason purchased office equipment for $4,800 on account. This transaction would
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increase assets and increase liabilities.
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3. Stephen purchased office supplies for $800 in cash. This transaction would
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increase one asset and decrease another asset.
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4. Meghan started her business by investing $30,000 in cash. This transaction would
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increase assets and increase owner's equity.
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5. Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would
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decrease assets and decrease liabilities.
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6. A decrease in owner's equity may result from a(n)
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withdrawal of cash from the business by the owner.
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7. The financial statement that should be completed first is the
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income statement.
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8. The financial statement that shows the state of the firm's assets, liabilities, and owner's equity on a specific date is called a(n)
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balance sheet.
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9. Accounts that affect owner's equity are
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expenses, capital, and drawing.
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10. Increases are entered on the credit side of a(n)
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liability account.
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11. A cash payment on a loan affects which of the following accounts?
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Cash and Notes Payable
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12. Liability, owner's capital, and revenue accounts normally have
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credit balances.
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13. Totals on the debit and credit sides to determine the balance of an account are known as
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footings.
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14. The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called
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double-entry accounting.
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15. An example of an expense is
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advertising.
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16. Examples of revenue accounts include all of the following EXCEPT
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Wages.
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17. An investment of cash in a business by the owner
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increases cash.
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18. A purchase of an asset on account
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increases assets.
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19. The balance sheet
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shows that assets equal liabilities plus owner's equity.
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An asset account is increased with a
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debit
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Owner's equity is increased with a
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credit
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To place an amount on the left-hand side of the T account is to __________ the account.
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debit
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The prepaid insurance account is increased by entering a __________.
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debit
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The drawing account is decreased by entering a __________.
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credit
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The accounts payable account is decreased with a __________.
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debit
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The owner's capital account is increased with a __________.
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credit
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The wages expense account is increased with a __________.
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debit
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The fees earned account is increased with a __________.
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credit
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The equipment account is decreased with a __________.
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credit
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Utility Expense
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Expense
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Accounts Payable
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Liability
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Prepaid Rent
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Asset
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Supplies
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Asset
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P. Coyote, Drawing
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owners Equity
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Wages Expense
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Expense
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P. Coyote, Capital
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Owners Equity
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Cash
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Asset
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Advertising Expense
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Expense
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Fees Earned
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Revenue
