Chapter 1 Accounting Review (11E)

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

• True

• False

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

• True

• False

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

• True

• False

Detailed information about changes in owner’s equity is needed by owners and managers to make sound business decisions.

• True

• False

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.

• True

• False

A transaction for the sale of goods or services results in a decrease in owner’s equity.

• True

• False

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

• True

• False

An expense is a decrease in owner’s equity resulting from the operation of a business.

• True

• False

The principles of right and wrong that guide an individual in making decisions is known as

• Accounting

• Business Management

• Business Ethics

Payments for advertising, equipment repairs, utilities, and rent are

• assets

• liabilities

• expenses

• sales