Accounting Chapter 1: Starting a Proprietorship

Question 1

A person or business to whom a liability is owed

Accepted Answer

creditor

Question 2

An expense is a decrease in owner's equity resulting from the operation of a business.

Accepted Answer

true

Question 3

Anything of value that is owned

Accepted Answer

asset

Question 4

Payments for advertising, equipment repairs, utilities, and rent are liabilities.

Accepted Answer

false

Question 5

After each transaction, the accounting equation must remain in balance.

Accepted Answer

true

Question 6

A negative amount of net worth reflects more debt than assets, something creditors would favor.

Accepted Answer

false

Question 7

Planning, recording, analyzing, and interpreting financial information is

Accepted Answer

accounting

Question 8

A planned process for providing financial information that will be useful to management is a(n)

Accepted Answer

business plan

Question 9

An equation showing the relationship among assets, liabilities, and owner's equity is a(n)

Accepted Answer

accounting equation

Question 10

A business activity that changes assets, liabilities, or owner's equity is called a(n)

Accepted Answer

transaction

Question 11

A sale for which cash will be received at a later date

Accepted Answer

sale on account

Question 12

Assets taken out of a business for the owner's personal use

Accepted Answer

withdrawals

Question 13

When items are bought & paid for at a future date, these items are bought on account.

Accepted Answer

true

Question 14

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

Accepted Answer

true

Question 15

A withdrawal is an expense.

Accepted Answer

false

Question 16

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

Accepted Answer

expense

Question 17

An amount owed by a business

Accepted Answer

liability

Question 18

A transaction for the sale of goods or services results in a decrease in owner's equity.

Accepted Answer

false

Question 19

The standards & rules accountants follow while recording & reporting financial activities are

Accepted Answer

GAAP

Question 20

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

Accepted Answer

capital account

Question 21

Detailed info about changes in OE is needed by owners to make sound business decisions.

Accepted Answer

true

Question 22

The difference between personal assets and personal liabilities

Accepted Answer

personal net worth

Question 23

A business owned by one person

Accepted Answer

proprietorship

Question 24

The accounting equation is most often stated as Assets + Liabilities = Owner's Equity.

Accepted Answer

false

Question 25

An increase in owner's equity resulting from the operation of a business

Accepted Answer

revenue

Question 26

The most common type of withdrawal by an owner from a business is the withdrawal of cash.

Accepted Answer

true

Question 27

When withdrawaling cash from a business, the transaction affects both assets and owner's equity.

Accepted Answer

true

Question 28

Withdrawals are assets taken out of a business for the owner's personal use.

Accepted Answer

true

Question 29

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

Accepted Answer

owner's equity

Question 30

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

Accepted Answer

account

Question 31

A formal report showing what an individual owns, owes, and the difference between the two is a

Accepted Answer

net worth statement

Question 32

The amount in an account

Accepted Answer

account balance

Accounting Chapter 1: Starting a Proprietorship

Questions 32

Accounting Chapter 1: Starting a Proprietorship

Questions 32