True/False
Indicate whether the sentence or statement is true
or false.
|
|
|
1.
|
A
balance sheet may be prepared on any date.
|
|
|
2.
|
A
revenue transaction decreases the sum of the balances on the left side of an accounting
equation.
|
|
|
3.
|
A
transaction for the sale of goods or services results in an increase in owner's equity.
|
|
|
4.
|
A
transaction is a normal business activity that changes assets, liabilities, or owner's
equity.
|
|
|
5.
|
A
transaction that increases accounts receivable and increases owner's equity is a sale on
account.
|
|
|
6.
|
A
withdrawal is a transaction that decreases cash and decreases owner's equity.
|
|
|
7.
|
Accounts Receivable is a liability account.
|
|
|
8.
|
An
expense is a decrease in owner's equity resulting from the operation of a business.
|
|
|
9.
|
An
owner may withdraw only cash from a business; other assets must remain in the business at all times
for the accounting equation to be in balance.
|
|
|
10.
|
Cash
is increased by expenses.
|
|
|
11.
|
Owner's equity accounts are presented above liability accounts on the balance
sheet.
|
|
|
12.
|
Payments for advertising, equipment repairs, utilities, and rent are expense
transactions.
|
|
|
13.
|
Regardless of when payment is made when services are sold, the revenue should be
recorded at the time of the sale.
|
|
|
14.
|
The
accounting equation must remain in balance after the changes caused by a transaction have been
recorded!
|
|
|
15.
|
The
heading of a balance sheet contains the name of the business, name of the report, and date of the
report.
|
|
|
16.
|
When
a company makes a sale of $300.00, assets and owner's equity increase by $300.00.
|
|
|
17.
|
When
a company makes payments for advertising and charitable contributions, the company is paying
expenses.
|
|
|
18.
|
When
a company receives cash from a customer for a prior sale, the transaction decreases the cash account
balance and increases the accounts receivable balance.
|
|
|
19.
|
When
an owner withdraws cash from the business, the transaction affects both assets and owner's
equity.
|
|
|
20.
|
When
cash is paid for expenses, the business has less cash; therefore, the asset account Cash is decreased
and the owner's equity account is increased!
|
|
|
21.
|
When
cash is paid to the owner for personal use, assets decrease and owner's equity
decreases.
|
|
|
22.
|
When
cash is received for services performed, the asset account Cash is increased and the owner's equity
account is decreased!
|
|
|
23.
|
Withdrawals are assets taken out of a business for the owner's personal
use.
|
|
|
24.
|
Revenue from a sale on account should be recorded when the payment is
received!
|
|
|
25.
|
When
a company makes a sale of $300.00, Cash and Accounts Receivable increase by $300.00.
|
Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
|
|
|
26.
|
A
business paid cash: for rent, $700.00; to owner for personal use, $200.00; and for equipment repair,
$50.00. Expenses from the operation of the business decreased owner's equity by
____. a. | $250.00 | c. | $950.00 | b. | $750.00 | d. | none of the above | | | | |
|
|
|
27.
|
A
business prepares a balance sheet to report information about ____. a. | expenses
incurred during a given period of time | b. | revenue received during a given period of
time | c. | he business's
assets, liabilities, and owner's equity | d. | profit the business has made for the
year | | |
|
|
|
28.
|
A
transaction that increases accounts receivable and increases owner's equity is ____. a. | revenue | c. | expense | b. | withdrawal | d. | none of the above | | | | |
|
|
|
29.
|
A
transaction that increases cash and decreases owner's equity is ____. a. | revenue | c. | expense | b. | withdrawal | d. | none of the above | | | | |
|
|
|
30.
|
A
transaction to pay for goods and services needed to operate a business results in a decrease in
____. a. | owner's
equity | c. | liabilities | b. | revenue | d. | expenses | | | | |
|
|
|
31.
|
An
established business should rarely experience a decrease in ____. a. | cash | c. | owner's
equity | b. | expenses | d. | liabilities | | | | |
|
|
|
32.
|
Cash
is increased by ____. a. | withdrawals | c. | revenue | b. | expenses | d. | none of the
above | | | | |
|
|
|
33.
|
If a
business paid cash for repairs to equipment, this would ____. a. | increase owner's
equity | c. | decrease owner's
equity | b. | increase liabilities | d. | decrease liabilities | | | | |
|
|
|
34.
|
If a
business received $2,000.00 from sales, this would ____. a. | increase assets
and increase owner's equity | b. | increase assets and decrease
liabilities | c. | increase liabilities and decrease owner's
equity | d. | decrease assets and decrease owner's
equity | | |
|
|
|
35.
|
If
cash is paid for advertising, ____. a. | two assets are changed | c. | an asset and owner's equity are
changed | b. | an asset and a liability are
changed | d. | two liabilities
are changed | | | | |
|
|
|
36.
|
Recording an expense transaction in an accounting equation causes liabilities to
____. a. | remain
unchanged | c. | decrease | b. | increase | d. | none of the above | | | | |
|
|
|
37.
|
Two
transactions that decrease owner's equity are ____. a. | expenses and
withdrawals | c. | withdrawals and
liabilities | b. | expenses and investments | d. | liabilities and expenses | | | | |
|
|
|
38.
|
When
cash is paid for an expense, ____. a. | assets increase; owner's equity
increases | b. | assets decrease; owner's equity
decreases | c. | assets decrease; owner's equity
increases | d. | none of the above | | |
|
|
|
39.
|
When
cash is received from sales, ____. a. | assets increase; owner's equity
decreases | b. | assets increase; owner's equity
increases | c. | assets decrease; owner's equity
decreases | d. | none of the above | | |
|
|
|
40.
|
When
the owner withdraws cash for personal use, ____. a. | liabilities increase and assets
decrease | b. | assets decrease and owner's equity
increases | c. | assets decrease and owner's equity
decreases | d. | liabilities decrease and assets
decrease | | |
|
|
|
41.
|
A
transaction for the sale of goods or services results in ____. a. | an increase in
owner's equity | c. | an increase in
liabilities | b. | a decrease in owner's equity | d. | a decrease in liabilities | | | | |
|
|
|
42.
|
An
increase in owner's equity resulting from the operation of a business is ____. a. | an
expense | c. | revenue | b. | a withdrawal | d. | none of the above | | | | |
|
|
|
43.
|
After
recording a revenue transaction in the accounting equation, the left and right sides of the equation
should be ____. a. | unequal | c. | decreased | b. | unchanged | d. | increased | | | | |
|
|
|
44.
|
A
decrease in owner's equity resulting from the operation of a business is ____. a. | a
withdrawal | c. | revenue | b. | an expense | d. | none of the above | | | | |
|
|
|
45.
|
Assets taken out of the business for the owner's personal use are
____. a. | withdrawals | c. | revenue | b. | expenses | d. | entries | | | | |
|
|
|
46.
|
The
asset most commonly withdrawn by business owners is ____. a. | insurance | c. | cash | b. | supplies | d. | contributions | | | | |
|
|
|
47.
|
A
cash payment for an expense would not include ____. a. | rent | c. | utilities | b. | withdrawals | d. | equipment repair | | | | |
|
|
|
48.
|
The
accounts shown on the left side of a balance sheet include ____. a. | prepaid
insurance | c. | advertising | b. | rent | d. | liabilities | | | | |
|
|
|
49.
|
The
total of the balances of the accounts on the left and right sides of a balance sheet should
____. a. | be
different | c. | equal owner's
equity | b. | be equal | d. | equal cash. | | | | |
|
|
|
50.
|
The
items shown on the right side of a balance sheet include ____. a. | capital and
assets | c. | liabilities and
owner's equity | b. | assets and owner's equity | d. | assets and liabilities | | | | |
|