Accounting I Final Exam Review

A transaction for the sale of goods or services results in a decrease in owner's equity.

• True

• False

An expense is a decrease in owner's equity resulting from the operation of a business.

• True

• False

The Matching Expenses with Revenue accounting concept is applied when the revenue earned and the expenses incurred to earn that revenue are reported in the same fiscal period.

• True

• False

After each transaction, the accounting equation must remain in balance.

• True

• False

In each pay period, the payroll information for each employee is recorded on his or her employee earnings record.

• True

• False

An outstanding check is one that has been issued but not yet reported on a bank statement.

• True

• False

When an owner withdraws cash from the business, the transaction affects both assets and owner's equity.

• True

• False

Each liability account has a normal debit balance.

• True

• False

The most common type of withdrawal by an owner from a business is the withdrawal of cash.

• True

• False

A drawing account is increased by debits and decreased by credits.

• True

• False