ACCT Ch 1

Accounting is the language of business.

• True

• False

A creditor would favor a positive net worth.

• True

• False

The principles of right and wrong that guide an individual in making personal decisions is called business ethics.

• True

• False

Keeping personal and business records separate is an application of the business entity concept.

• True

• False

Generally Accepted Accounting Principles, GAAP, allows for flexibility in reporting.

• True

• False

Recording business costs in terms of hours required to complete projects is an application of the unit of measurement concept.

• True

• False

Assets such as cash and supplies have value because they can be used to acquire other assets or be used to operate a business.

• True

• False

The relationship among assets, liabilities, and owner’s equity can be written as an equation.

• True

• False

The accounting equation does not have to be in balance to be correct.

• True

• False

When a company pays insurance premiums in advance to an insurer, it records the payment as a liability because the insurer owes future coverage.

• True

• False