Accounting Final Exam Study Guide

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

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

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When items are bought and paid for at a future date, another way to state this is to say these items are bought on account.

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Keeping separate the financial records for a business and for its owner�s personal belongings is an application of the Business Entity accounting concept.

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

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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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Each liability account has a normal debit balance.

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Asset accounts decrease on the credit side.

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Cash is increased with a debit.

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A check mark in parentheses below a General Debit column total indicates that the total is not posted.

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