ACCOUNTING CHAPTER 1 TEST

The accounting assumption that a business exists independently of its owner’s personal holdings

• business entity
• for-profit business
• not-for-profit organization
• going concern

The amount remaining after the value of all liabilities is subtracted from the value of all assets is ____.

• the fair market value of the business

• owner's equity

• a financial report

• a transaction

The accounting equation is most often stated as ____.

• Assets = Liabilities

• Cash = Assets

• Assets = Liabilities + Owner's Equity

• Liabilities + Assets = Owner's Equity

In the United States, recording business transactions in dollars is an application of the accounting concept

• Unit of Measurement

• Business Entity

• Going Concern

• Separation of Records

The account used to summarize the owner's equity in a business is ____.

• equity

• owner's equity

• capital

• a liability

If cash is increased by $2,000.00 when the owner invests cash in the business, then capital is ____.

• increased by $2,000.00

• decreased by $2,000.00

• increased by $1,000.00

• not changed

When a transaction changes both sides of the accounting equation, ____.

• an increase on the right side must offset a decrease on the left side

• an increase on the left side must equal an increase on the right side

• neither side of the equation changes

• none of the above

When a business pays cash for supplies, ____.

• liabilities increase

• assets and liabilities increase

• assets and liabilities decrease

• assets increase and assets decrease

Prepaid Insurance is ____.

• an asset account

• a liability account

• an owner's equity account

• none of the above

Buying items and paying for them at a future date is ____.

• not recommended

• not a common business practice

• illegal

• a common business practice

Tags

CCSS.RI.7.2

CCSS.RI.8.2

CCSS.RL.11-12.2

CCSS.RL.8.1

CCSS.RL.9-10.2