Acct 1 - Unit 3 Review

Mariah Smith, Capital and Mariah Smith, Drawing are both classified as:

• owner's equity

• expenses

• liabilities

• revenue

What is the effect on assets when the owner increases owner's equity by investing $1,000 in the business?

• Assets are decreased by $1,000

• Assets are decreased by $2,000

• Assets are increased by $1,000

• Assets are increased by $2,000

Mary is preparing a Balance Sheet. When she completes the Owner's Equity Section, what should the end result represent?

• The Total Assets are less than the Owner's Equity.

• The Total Assets plus Total Liabilities Owner's Equity.

• The Total Assets should equal Total Liabilities plus Owner's Equity.

• The Total Assets should equal Total Liabilities minus Owner's Equity.

What is an example of an account that has a normal debit balance?

• Accounts Payable/Ray's Office Equipment

• Insurance Expense

• Ray Smith, Capital

• Sales

What is the effect when $300 cash is paid to Accounts Payable/Bob's Office Supply?

• Assets decrease by $300 and owner's equity decreases by $300

• Assets increase by $300 and owner's equity increases by $300

• Assets increase by $300 and liabilities decrease by $300

• Assets decrease by $300 and liabilities decrease by $300

What is an example of an account that has a normal credit balance?

• Cash

• Accounts Payable/Jones Supply

• Prepaid Insurance

• Supplies

What is the effect on owner's equity when a business receives $2,000 cash from sales?

• Owner's equity is decreased by $2,000

• Owner's equity is increased by $2,000

• Owner's equity is decreased by $4,000

• Owner's equity is increased by $4,000

Sales is classified as:

• assets

• expenses

• liabilities

• revenue

Rent, the telephone bill, and advertising costs are all classified as:

• assets

• expenses

• liabilities

• revenue

Which is an example of an account that carries a normal credit balance?

• Cash

• Joan Brown, Drawing

• Supplies

• Tyler Jackson, Capital