Accounting Chapter 5 Review

Liability, expense, and capital accounts all have normal credit balances.

• True

• False

Expenses decrease owner’s equity and are recorded as debits.

• True

• False

The rules of debit and credit for expense accounts are the same as the rules for asset accounts.

• True

• False

A business should have separate accounts for recording revenue and expenses.

• True

• False

Liability, revenue, and withdrawal accounts all have normal credit balances.

• True

• False

The withdrawal of cash by the owner of a business decreases owner's equity.

• True

• False

Expenses have the opposite effect from revenue on the capital account.

• True

• False

Temporary capital accounts are extensions of the owner's capital account.

• True

• False

Permanent accounts start each accounting period with a zero balance.

• True

• False

Revenues increase owner's equity, and increases in revenues are recorded as debits.

• True

• False