Acct Test Bank #1 Analyze Transactions

The most fundamental accounting concept to learn is the accounting equation.

• True

• False

Items in a business that represent value are called assets.

• True

• False

A sole proprietorship type of business is the easiest to form and offers limited liability.

• True

• False

If assets are 15,000 and Liabilities are 5,000, then owner’s equity equals $10,000.

• True

• False

The primary drawback of the corporation is double taxation.

• True

• False

Devlin has been a bookkeeper for more than twenty years and appreciates the importance of acting in accordance with professional standards and all applicable laws. What key quality of a bookkeeper is Devlin displaying?

• Confidentiality

• Security

• Integrity

• None of these options

Which of these is equivalent to the accounting equation?

• Assets = Liabilities – Owner’s Equity

• Assets – Liabilities = Owner’s Equity

• Assets + Liabilities = Owner’s Equity

• Assets + Owner’s Equity = Liabilities

If Priya, owner of Gymnastics Oasis, invested 20,000 in her business and owers 8,000 to outside entities, what is the amount of the business’s assets?

• $28,000

• $12,000

• $20,000

• $8,000

Match each term to its best description.

• Assets

• The most fundamental accounting concept

• Liabilities

• Portion of assets owed to entities outside the business

• Owner’s equity

• Refers to items of value within the business

• Accounting equation

• Portion of assets that owner's have a claim too

Match each business type to its corresponding characteristic.

• Owned by two or more individuals

• Partnership

• Offers limited liability to its owners

• Corporation

• The easiest business type to form

• Sole proprietorship