UIL Accounting Practice 1

If only one asset is affected by a transaction, then an equity account must be affected in the same

way.

• True

• False

When a transaction affects only asset accounts, the net change to the accounting equation is

zero.

• True

• False

A transaction must always affect at least one asset account in order for the accounting equation

to balance.

• True

• False

If liabilities exceed assets, the owner’s equity account will have a deficit balance.

• True

• False

Proprietorships and partnerships have limited liability.

• True

• False

R. U. Serious, Capital is an example of a nominal account.

• True

• False

R. U. Serious, Drawing is an example of a contra-account.

• True

• False

If an accountant forgets to record a purchase of merchandise on account, both gross profit and

net income will be understated.

• True

• False

If the beginning inventory is mistakenly overstated in the current fiscal period and the error is not

detected and corrected, net income will be understated in the current period.

• True

• False

A balance sheet with assets, liabilities, and owner’s equity listed in a vertical arrangement is

called the account form of a balance sheet.

• True

• False