True/False
Indicate whether the sentence or statement is true
or false.
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1.
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A
balance sheet may be prepared on any date.
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2.
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A
revenue transaction decreases the sum of the balances on the left side of an accounting
equation.
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3.
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A
transaction for the sale of goods or services results in an increase in owner's equity.
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4.
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A
transaction that increases accounts receivable and increases owner's equity is a sale on
account.
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5.
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A
U.S. business applies the realization of revenue accounting concept when it records revenues in U.S.
dollars.
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6.
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A
withdrawal is a transaction that decreases cash and decreases owner's equity.
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7.
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A
withdrawal is an expense.
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8.
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Accounts Receivable is a liability account.
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9.
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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.
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10.
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Asset
accounts are shown on the right side of the balance sheet.
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11.
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Business expenses include payments for goods and services used to operate a
business.
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12.
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Cash
is increased by expenses.
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13.
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Few
businesses need to prepare a balance sheet every day.
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14.
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Owner's equity accounts are presented above liability accounts on the balance
sheet.
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15.
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Owner's equity is decreased by a sale on account.
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16.
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Payments for advertising, equipment repairs, utilities, and rent are expense
transactions.
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17.
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Recording an expense transaction in an accounting equation increases
liabilities.
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18.
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Regardless of when payment is made when services are sold, the revenue should be
recorded at the time of the sale.
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19.
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The
accounting equation must remain in balance after the changes caused by a transaction have been
recorded.
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20.
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The
accounts on the left side of the accounting equation are reported on the left side of the balance
sheet.
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21.
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The
balance sheet reports the balances of the asset, liability, and owner's equity
accounts.
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22.
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When
an owner withdraws cash from the business, the transaction affects both assets and owner's
equity.
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23.
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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.
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24.
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When
cash is paid to the owner for personal use, assets decrease and owner's equity
decreases.
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25.
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When
cash is received for services performed, the asset account Cash is increased and the owner's equity
account is decreased.
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26.
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Withdrawals are assets taken out of a business for the owner's personal
use.
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27.
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Revenue from a sale on account should be recorded when the payment is
received.
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28.
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Payments for advertising, equipment repairs, utilities, and rent increase
assets.
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29.
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A
business cannot succeed if owner's equity decreases each time period.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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30.
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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 | | | | |
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31.
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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. | the business's
assets, liabilities, and owner's equity | d. | profit the business has made for the
year | | |
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32.
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A
transaction that increases accounts receivable and increases owner's equity is ____. a. | revenue | c. | expense | b. | withdrawal | d. | none of the above | | | | |
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33.
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A
transaction that increases cash and decreases owner's equity is ____. a. | revenue | c. | expense | b. | withdrawal | d. | none of the above | | | | |
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34.
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An
established business should rarely experience a decrease in ____. a. | cash | c. | owner's
equity | b. | expenses | d. | liabilities | | | | |
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35.
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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 | | |
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