Ch. 3: Business Transactions & Accounting Equation

Any item of property has at least one ________ claim against it.

• financial

• physical

• emotional

• historical

Owner’s equity is changed by which of the following?

• Revenue, expenses, and withdrawals

• Only revenue

• Only expenses

• Only withdrawals

The relationship between property and financial claims is best described as:

• Property represents assets, while financial claims represent the rights to those assets.

• Property and financial claims are the same thing.

• Financial claims are physical assets, while property is intangible.

• Property is always a liability, while financial claims are always assets.

The term equities in accounting refers to:

• the ownership interest in the assets of a business after deducting liabilities.

• the total amount of cash held by a business.

• the debts owed by a business to external parties.

• the revenue generated from sales activities.

Which of the following correctly lists and defines each part of the accounting equation?

• Assets: resources owned; Liabilities: obligations owed; Owner's Equity: owner's claim on assets

• Assets: obligations owed; Liabilities: resources owned; Owner's Equity: owner's claim on liabilities

• Assets: owner's claim; Liabilities: resources owned; Owner's Equity: obligations owed

• Assets: owner's claim; Liabilities: obligations owed; Owner's Equity: resources owned

Businesses use accounts to:

• Record and track financial transactions

• Design marketing strategies

• Manufacture products

• Hire new employees

The effects of transactions on the accounting equation can be demonstrated by which of the following?

• By showing how assets, liabilities, and equity change with each transaction

• By only recording cash transactions

• By ignoring liabilities in the equation

• By focusing solely on revenue generation

What is the meaning of the term 'property' in accounting?

• Anything of value that is owned or controlled by a business or individual.

• A type of liability incurred by a business.

• The total revenue generated by a business in a year.

• A method of recording business transactions.

What is the meaning of the term 'financial claim' in accounting?

• A legal right to property or assets.

• A method of calculating interest.

• A type of financial statement.

• A process of recording transactions.

What is the meaning of the term 'credit' in accounting?

• An entry recording a sum received, listed on the right-hand side or column of an account.

• A deduction from the total assets of a company.

• A record of all cash transactions in a business.

• An entry recording a sum paid, listed on the left-hand side or column of an account.