Accounting Quiz: How Transactions Affect Owner's Equity

What is the definition of revenue?

• The money generated from all sales of goods and services over a certain time period.

• The money generated from all expenses incurred by a business over a certain time period.

• The money generated from all purchases of goods and services over a certain time period.

• The money generated from all investments made by a business over a certain time period.

Which account is often referred to as the 'top line'?

• Revenue

• Assets

• Liabilities

• Owners' Equity

What accounts are affected in Transaction 7: Provide Service for Cash?

• Cash (Asset) and Service Revenue (Revenue)

• Accounts Payable (Liability) and Service Revenue (Revenue)

• Cash (Asset) and Accounts Receivable (Asset)

• Accounts Payable (Liability) and Accounts Receivable (Asset)

What is the purpose of an invoice?

• To decrease the value of owners' equity.

• To record revenue when it is earned, not when payment is received.

• To track the current balance of all money owed to a company for goods and/or services.

• To outline the goods or services sold, total amount owed, and the terms/methods of payment.

Which account is an expense?

• Advertising Expense

• Service Revenue

• Accounts Receivable

• Cash

What is the formula for net income?

• Net Income = Owners' Equity - Liabilities

• Net Income = Assets - Liabilities

• Net Income = Revenue - Expenses

• Net Income = Revenue + Expenses

What is the expanded accounting equation?

• Assets = Liabilities + Owners' Equity

• Owners' Equity = Owner, Capital - Owner, Distribution + Revenues - Expenses

• Assets = Liabilities + Owner, Capital - Owner, Distribution + Revenues - Expenses

• Assets = Liabilities + Owner, Capital + Owner, Distribution + Revenues + Expenses

Which accounts are affected by the Payment of monthly rent expenses WITH Cash?

• Office Rent (Expense) and Cash (Asset)

• Office Rent (Expense) and Accounts Payable (Liability)

• Advertising Expense (Expense) and Cash (Asset)

• Advertising Expense (Expense) and Accounts Payable (Liability)

What is the purpose of a contra-equity account?

• To decrease assets

• To increase assets

• To decrease owners' equity

• To increase owners' equity

What accounts are affected in when by a Withdrawal of Cash by Owner?

• Accounts Payable (Liability) and Accounts Receivable (Asset)

• Cash (Asset) and Owner- Distribution (Contra-Equity)

• Cash (Asset) and Accounts Receivable (Asset)

• Accounts Payable (Liability) and Owner Distribution (Contra-Equity)