The Accounting Equation

The accounting equation must always be balanced.

• True

• False

Which of the following is not a liability?

• Car Loan

• Inventory

• CreditCardBalance

Capital is the value of the owner's investment in the business after subtracting liabilities from assets.

• True

• False

Define the term owners equity.

The company receives cash from a bank loan.

• Assets

• Equity

• Liabilities

The companies purchase supplies on credit.

• Liabilities

• Equity

• Assets

The company repays the bank that had lent money.

• Assets

• Liabilities

• Equity

• Bartor

The company purchase equipment with its cash

• Equity

• Liability

• Assets

Which of the following statement is incorrect?

• Liabilities + Assets = Capital

• Liabilities + Capital = Assets

• Assets - Liabilities = Capital

• Assets - Capital = Liabilities

Which of the following systems is the Accounting Equation based on.

• True entry system of accounting

• Single entry system of accounting

• Double entry system of accounting

• None of the above