Exercise 1

The basic accounting equation is Assets = Liabilities + __________

Which of the following will cause owner's equity to increase?

• Expenses

• Owner Draws

• Revenue

• None

Which of the following will cause owner's equity to decrease?

• Net Income

• Net Loss

• Revenue

The accounting equation should remain in balance because every transaction affects how many accounts?

• Only One

• Only Two

• Two Or More

A corporation's net income is eventually recorded in the following stockholders' equity account: __________

A corporation's quarterly __________  will cause a reduction in the corporation's retained earnings, which in turn reduces the corporation's stockholders' equity. However, this will not reduce the corporation's net income.

The financial statement with a structure that is similar to the accounting equation is the __________

The financial statement that reports the portion of change in owner's equity resulting from revenues and expenses during a specified time interval is the __________

Using the basic accounting equation identify the missing item.Assets = 8969 Liabilities = 13738 Capital = 1000 Retained Earnings = ?

• (5,469)

• 5,769

• (5,769)

What does the accounting equation form the basis for?

• Single entry bookkeeping

• Cash books

• Double entry bookkeeping