Business Transactions and the Accounting Equation

Anything of value that is owned.

• asset
• liability
• owner's equity
• expenses

Assets taken out of a business for the owner’s personal use.

• liabilities
• expenses
• assets
• withdrawals

An amount owed by a business.

• expense
• liability
• asset
• equity

A decrease in owner’s equity resulting from the operation of a business.

• equity
• ethics
• equality
• expense

An increase in owner’s equity resulting from the operation of a business.

• expense

• revenue
• equities
• equity

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

• TRUE
• FALSE

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

• TRUE

• FALSE

When items are bought and paid for at a future date, another way to state this is to say these items are bought on account.

• TRUE
• FALSE

Payments for advertising, equipment repairs, utilities, and rent are liabilities.

• TRUE
• FALSE

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

• TRUE
• FALSE