SJI10- TLE 2ND QUARTER TERMS

What does the accounting equation represent?

• Assets = Liabilities + Owner’s Equity

• Assets = Liabilities + Owner’s Equity + Revenues - Expenses

• Assets + Liabilities = Owner’s Equity

• Revenues - Expenses = Owner’s Equity

What effect do investments by the owner have on owner’s equity?

• Decrease owner’s equity

• Increase owner’s equity

• Have no effect on owner’s equity

• Increase liabilities

What are drawings in accounting terms?

• Increases in owner’s equity

• Withdrawals of cash or other assets by the owners

• Revenues earned by the business

• Expenses incurred by the business

What is defined as gross increases in owner’s equity from business activities?

• Expenses

• Drawings

• Revenues

• Assets

Which of the following represents decreases in owner’s equity?

• Revenues

• Drawings

• Investments

• Assets

Which of the following best describes revenues?

• Decreases in owner’s equity

• Increases in owner’s equity from activities aimed at generating income

• Increases in liabilities

• Expenses incurred by the business

What happens to owner’s equity when a business incurs expenses?

• It increases

• It decreases

• It has no effect

• It remains constant

How do expenses affect the accounting equation?

• Increase total assets

• Decrease liabilities

• Decrease owner’s equity

• Increase revenues

What component of the accounting equation is affected by revenue generation?

• Liabilities

• Assets

• Owner’s Equity

• All of the above

What does the expanded accounting equation include?

• Only assets and liabilities

• Investments and drawings

• Revenues and expenses as they affect owner’s equity

• Liabilities and owner’s equity only