Pre-Test for Accounting I

The accounting equation is most often stated as Assets + Liabilities = Owner’s Equity.

• True
• False

Detailed information about changes in owner’s equity is needed by owners and managers to make sound business decisions.

• True
• False

When two asset accounts are changed in a transaction, there must be an increase and a decrease.

• True
• False

A negative amount for net worth would reflect more debt than assets, something a creditor would favor.

• True
• False

An accounting device used to analyze transactions is a T account.

• True
• False

After each transaction, the accounting equation must remain in balance.

• True
• False

Each asset account has a normal credit balance.

• True
• False

Each liability account has a normal debit balance.

• True
• False

An amount recorded on the right side of a T account is a debit.

• True
• False

The source document for all cash payments is a check.

• True
• False