Accounting Chapter 1

Which of these is the Accounting Equation?

• Liabilities = Owner's Equity + Assets

• Assets = Liabilities + Owner's Equity

• Liabilities = Owner's Equity - Assets

• Assets = Liabilities - Owners Equity

Which of these groupings are considered assets?

• Cash & Accounts Payable

• Supplies & Accounts Payable

• Cash & Supplies

• Prepaid Insurance & Accounts Payable

True or False: What you must do to one side of the equation you have to do to the opposite side?

A business owned by one person is called a..........

• Sole Proprietorship

• Franchise

• LLC (limited Liability Corporation)

• Corporation

What does the phrase ON ACCOUNT refer to?

• You have inventory of whatever it is you bought

• You paid off your account

• You paid CASH and it's in your account

• You have charged something that needs to be paid back

How can a transaction affect only one side of the accounting equation?

• It will never affect one side....it has to involve both sides

• You have a transaction that involves an asset and a liability

• You have a transaction that involves two assets

• You have a transaction that involves an asset and Owner's Equity

True or False: The name give to an account is called a transaction

What is the "letter" that separates Assets from Liabilities and Owners Equity?

• T

• V

• I

• The Accounting Equation

The account used to summarize the owner's equity in a business is called?

• Cash

• Sweat Equity

• Transaction

• Capital

True or False: Supplies can be considered an asset AND a liability