Accounting S1 Exam Review

The most common type of legal business organization is the ____.

• partnership

• sole proprietorship

• corporation

• franchise

In accounting, any items that belong to the business and have monetary value are called ____.

• equities

• liabilities

• assets

• deposits

Recording and reporting a business's financial information separately from the owner's financial information is an application of the accounting concept ____.

• unit of measurement

• business entity

• going concern

• separation of records

Financial rights to items (not the items themselves) owned by a business are known as ____.

• financials

• assets

• equities

• stocks

The official accounting equation is most often (and most properly) stated as ____.

• assets = liabilities + expenses

• assets = liabilities + owner's equity

• revenue - expenses = profit

• receivables - payables = owner's equity

When a transaction changes both sides of the accounting equation, ____.

• an increase on the right side must offset a decrease on the left side

• an increase on the left side must equal an increase on the right side

• neither side of the equation changes

• none of the above

If cash is increased by $2,000.00 when the owner invests cash in the business, then capital is ____.

• also increased by $2,000.00

• increased by $1,000.00

• decreased by $2,000.00

• not changed

When cash is decreased and supplies are increased by an equal amount, ____.

• there is an increase in liabilities

• there is a decrease in liabilities

• there is a decrease in owner's equity

• liabilities and capital are not changed

When a transaction changes only one side of the accounting equation, if one account is increased, the other account on the same side must ____.

• increase

• decrease

• not change

• none of the above

Buying items and paying for them at a future date is ____.

• not recommended by most business suppliers

• not a common business practice

• illegal

• a common business practice