0201-Accounting Equation - T/F

The basic accounting equation states that Assets = Liabilities.

• True

• False

Accountants record both internal and external transactions.

• True

• False

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

• True

• False

The purchase of store equipment for cash reduces the owner's equity by an equal amount.

• True

• False

The purchase of office equipment on credit increases total assets and total liabilities.

• True

• False

At the time an asset is acquired, cost and value should be the same.

• True

• False

The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.

• True

• False

External transactions involve economic events between the company and some other enterprise or party.

• True

• False