Unit 6 Review

A creditor is most likely to examine a business’s financial accounting records if the business is

• applying for a bank loan.
• selecting a new market.
• using cash accounting.
• complying with regulations.

Which of the following is a Liability?

• Rent Payable
• Cash
• Capital
• Rent Receivable

Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:

• Balance sheet
• Cash flow statement
• Income statement
• Bank statement

A chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount are the

• Accounting System
• General Journal
• Accounting Process
• Transaction Process

Also known as stockholders’ (or shareholders’) equity, book value, and net worth.

• Assets
• Liabilities
• Equity
• Net Worth

The process of keeping the financial records of a business is known as

• accounting
• controlling
• financing
• bookeeping

A bank denies a business owner’s application for credit saying, “We feel that you would be un-able to make the monthly payments because of your other debts.” What financial report did the bank review?

• Budget
• Balance sheet
• Income statement
• Operating budget

Accounting records for a business show that the week’s total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example of

• classifying financial information
• the cash accounting method
• an income statement.
• the accrual method of accounting.

In the Accounting Equation which of the following statements are true

• A debit in Assets increases while a debit Liabilities increases
• A debit in Assets increases while a debit Liabilities decrease
• A credit in Assets decreases while a credit in Owner’s Equity decreases.
• A credit in Assets increases while a credit in Owner’s Equity increases.

An accounting device used to analyze transactions is called

• T Account
• Account System
• Account Equation
• Transactions