Acct Ch 2-Analyzing Transactions: The Accounting Equation

Withdrawing cash from a business entity will result in an increase in owner's equity.

_____ is the amount by which business assets exceed the business liabilities.

If the revenue of a period exceeds the expenses, the excess represents a net loss.

A separate record used to summarize changes in each asset, liability, and owner's equity of a business.

An increase in a revenue account may also result in an increase in the accounts receivable account.

The amount by which the business assets exceed the business liabilities.

The statement of owner's equity shows the state of the business on a specific date.

Most businesses recognize _____ when earned, even if cash has not yet been received.

Because insurance lasts for several months, it is recorded as owner's equity.

Assets are items that are owned by the business and are expected to provide future benefits.

Any accounting period of twelve months duration is usually referred to as a(n)

Expenses represent a decrease in liabilities.

Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would

Accounts Payable is an example of an asset account.

_____ represent probable future benefits.

Reports assets, liabilities, and owner's equity on a specific date.

_____ represent the decrease in assets (or increase in liabilities) as a result of efforts made to produce revenues.

The balance sheet reports assets, liabilities, and owner's equity on a specific date.

Liabilities represent an "inside" interest in a business.

Megan started her business by investing $30,000 in cash. This transaction would

When payment is made on an existing debt, which accounts increase or decrease?

Revenues received during an accounting period increase owner's equity.

A(n) _____ is a separate record used to summarize changes in assets, liabilities, and owner's equity of a business.

Recognizing the effects of transactions on assets, liab, OE, revenue, & expenses of a biz is the processing function.

An individual, association, or organization that engages in economic activities and controls specific economic resources

Fin stmts commonly prepared by businesses include an income statement, a statement of owner's equity and a balance sheet

The decrease in assets (or increase in liabilities) as a result to produce revenues.

Any item a business owns that will provide future benefits is called owner's equity.

_____ represent the amount a business charges customers for products sold or services performed.

According to the business entity concept, a proprietor may include non business assets/liabilities in the bus records.

Reports beginning capital, plus net income, less withdrawals to compute ending capital.

Reports the profitability of business operations for a specific period of time.

Other terms used for owner's equity include net worth and capital.

Liabilities are listed on the balance sheet from least current to most current.

Jason purchased office equipment for $4,800 in cash. This transaction would

The accounting equation may be expressed as

A(n) _____ is an economic event that has a direct impact on the business.

The accounting equation may be expressed as assets - liabilities = owner's equity.

Sue paid $1200 for her employees' salaries. This transaction would

A(n) ____ is a reduction in OE as a result of the owner taking cash or other assets out of the business for personal use

An example of an expense is

It is not necessary to measure a business transaction in dollars.

If owner's equity and liabilities increased during the period, then assets must also have increased.

Amounts owed to the business by its customers are called _____.

The accounting equation shows the relationship among the 3 basic accounting elements assets, expenses, & owner's equity.

A decrease in owner's equity may result from a(n)

The _____ reports investments/w/drawals, profits/losses generated thru operations, & how they affected the capital acct.

Falana received $7000 in cash from a client for professional services rendered. This transaction would

A formal written promise to pay a supplier or lender a specified sum of money at a definite future time.

Stephen purchased office supplies for $800 on account. This transaction would

The relationship between the 3 basic acct elements: ___, can be expressed as a simple equation-the accounting equation.

The income statement and statement of owner's equity provide information covering a period of time.

Because supplies last for several months, they are recorded as assets.

Business transactions are part of which phase in the accounting process?

A biz entity is an indiv, assoc, or organ with control over economic resources & which engages in economic activities.

Expenses that are incurred in operating the enterprise increase owner's equity.

The income statement provides information about events over a period of a month, year, or other period of time.

Which of the following accounts does not appear on the income statement?

When delivery revenue is earned on account, which accounts increase or decrease?

An increase to which of these accounts will increase owner's equity?

The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.

An unwritten promise to pay a supplier for assets purchased or services rendered.

The _____, sometimes called the profit and loss stmt, reports profitability of biz operations for a specific time period

Withdrawals that reduce OE as a result of the owner taking cash or other assets out of the business for personal use.

An amount owed to a business by its customers as a result of the sale of goods or services.

When an asset increases, a liability must also increase.

The report which shows a firm's assets, liabilities, and owner's equity as of a specific date is called the _____.

The excess of total revenues over total expenses for the period.

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

A _____ is an unwritten promise to pay a supplier for assets purchased or services rendered.

According to the _____, nonbusiness assets and liabilities are not included in the business entity's accounting records.

The financial statement that shows the state of the firm's assets, liabilities, and owner's equity on a specific date is

In the accounting process, the financial statements are the _____.

Identifying accounts and classifying accounts is part of which phase in the accounting process?