PAP01-Bookkeeping (Final Exam)

Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.

• True

• False

Owners' claims to total business assets take precedence over the claims of creditors because owners invest assets in the business and are liable for losses.

• True

• False

A balance sheet reports the assets, liabilities, and owner's equity at a specific date.

• True

• False

A statement of cash flow lists information on the cash receipts and payments for a specific period of time.

• True

• False

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

• Recording

• Analysis

• Communication

• Identification

A balance sheet shows

• assets, liabilities, and owner's equity.

• revenues, expenses, and drawings.

• expenses, drawings, and owner's equity.

• revenues, liabilities, and owner's equity.

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

Credits

• decrease both assets and liabilities.
• decrease assets and increase liabilities.
• increase both assets and liabilities.
• increase assets and decrease liabilities.

Assets normally show

• credit balances.
• debit balances.
• debit and credit balances.
• debit or credit balances.