Accounting I Ch 1

The standard order of the accounting equation is...

• Liabilities-Assets = Equity

• Assets = Liabilities -Equity

• Assets = Liabilities + Equity

• Liabilities = Assets + Equity

The accounting equation must always balance.

• True

• False

When items are bought and paid for at a future date, it is called buying on ___

A business owner should record their personal expenses in their business records.

• True

• False

When two asset accounts (ex: cash and supplies) are changed in a transaction, both accounts will increase.

• True

• False

When a business owner takes an asset (usually cash) out of the business for personal use it is called a _____

• Deduction

• Withholding

• Deposit

• Withdrawal

If an owner takes cash out of the business, the transaction affects both cash (an asset) AND which other account?

• Owner's Equity

• Accounts Payble

• Accounts Receivable

• Supplies

Which of the following IS NOT an expense (that would reduce Owner's Equity)?

• Utilities

• Rent

• Prepaid Insurance

• Advertising

A sale will increase the cash (or accounts recievable) asset AND which other account?

• Accounts Payble

• Owner's Equity

• Supplies

• Prepaid Insurance

Paying cash for supplies will decrease cash and _____ supplies.

• Increase

• Decrease