The Accounting Equation

A transaction is any event or activity that can be measured in terms of money.

• True

• False

Transactions do not need to be recorded to keep accurate records.

• True

• False

Every transaction relates to an account.

• True

• False

Debits and credits are a system of notation used to record transactions.

• True

• False

Debits are always located on the right and credits are always located on the left of a record sheet.

• True

• False

The accounting equation is:

• Assets = Liabilities + Equity

• Liabilities = Assets + Equity

• Equity = Liabilities + Assets

An asset is

• land

• buildings

• money

• equipment

• all of the above

an item of value owned by a company

• Asset

• Liability

• Equity

obligations of the business to transfer something of value to another party.

• Asset

• Liability

• Equity

indicates the value of a company to its owners.

• Asset

• Liability

• Equity