FBLA Accounting 2005

Front

The capital account is an owner's equity account.

Back

True

Answer explanation

The correct answer is True because the capital account represents the owner's equity in the business.

Front

If two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance.

Back

True

Answer explanation

The correct answer is True because if two amounts are recorded on the same side of the accounting equation, it will no longer be in balance.

Front

A business that performs an activity for a fee is a service business.

Back

True

Answer explanation

The correct choice is True because a service business provides services in exchange for a fee, distinguishing it from other types of businesses.

Front

A proprietorship is also known as a sole proprietorship.

Back

True

Answer explanation

The statement is true because a proprietorship and a sole proprietorship refer to the same type of business structure where one individual owns and operates the business.

Front

A business has two types of equities.

Back

True

Answer explanation

The correct answer is true because a business can have two types of equities, such as common stock and preferred stock.

Front

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

Back

True

Answer explanation

The statement is true because when an owner withdraws cash, it reduces the assets (cash) and owner's equity in the business.

Front

When cash is paid to the owner for personal use, assets decrease and owner's equity decreases.

Back

True

Answer explanation

When cash is paid to the owner for personal use, assets decrease as cash is an asset, and owner's equity decreases since the owner is withdrawing funds for personal use. Therefore, the statement is true.

Front

The right side of a balance sheet presents liabilities and assets.

Back

True

Answer explanation

The statement is true because the right side of a balance sheet typically presents liabilities and assets, making it an accurate representation.

Front

Sandra Stern, Drawing is increased with a credit.

Back

True

Answer explanation

The statement indicates that Sandra Stern's drawing is increased with a credit, which makes the answer True.

Front

The source document for cash payments is a check.

Back

True

Answer explanation

The correct answer is True because the source document for cash payments is typically a check.