Recording Business Transactions

When owner’s equity decreases, one of the following must occur:

• withdrawals decreases

• an asset increases

• an income increases

• a liability increases

What function do accounting journals serve in the accounting process?

• classifying

• summarizing

• reporting

• recording

When cash is debited, a typical credit is to

• withdrawals

• accounts payable

• accounts receivable

• expenses

Payment of insurance premiums in advance gives rise to

• prepaid expenses

• unearned income

• accrued income

• accrued expense