Accounting I Ch 1

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

• True

• False

When an owner withdraws cash from the business, the transaction affects both assets and owner’s equity.

• True

• False

A negative amount for net worth would reflect more debt than assets, something a creditor would favor

• True

• False

The most common type of withdrawal by an owner from a business is the withdrawal of cash.

• True

• False

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

• True

• False

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

• True

• False

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

• True

• False

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

• 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

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