Accounting - 3. Business Transactions & the Accounting Equation

The accounting equation should remain in balance after each transaction.

• True
• False

A business transaction affects at least two accounts.

• True
• False

"Assets + Liabilities = Owner's Equity" is another way to express the accounting equation.

• True
• False

The increases and decreases caused by business transactions are recorded in specific accounts.

• True
• False

A business transaction that involves a purchase on account is considered to be a(n)

• cash transaction
• credit transaction
• investment by the owner
• expense transaction

The private enterprise system is based on the right to own property.

• True
• False

The owner's personal financial transactions are part of the business's records.

• True
• False

The total financial claims to the assets of a business are referred to as equity.

• True
• False

The owner's claims to the assets of a business are liabilities.

• True
• False

When a business transaction occurs, the financial position of the business changes.

• True
• False