Activity on LM01-CP02 v2.0

Which of the following equation is correct?

• Asset + Liabilities = Capital

• Assets = Liabilities - Capital

• Assets - Liabilities = Capital

• Assets + Capital = Liabilities

All of the following affect the owner's equity, except?

• withdrawal by owner

• rendering services to customers

• purchased of land

• additional investment

The word "credit" means increase and the word "debit" means decrease.

• True

• False

For every transaction, there is at least two accounts affected.

• False

• True

A business received cash from its customer for services rendered. The effect of the transaction is

• increase in asset and decrease in capital

• increase in an asset and increase in capital

• increase in an asset and decrease in capital

• increase in liability and decrease in capital

The purchase of supplies on account (or on credit) will

• increase Supplies (Asset) and decrease Cash (Asset)

• Decrease Supplies (Assets) and decrease Accounts payable (Liabilities)

• decrease Capital (Equity) and increase Accounts payable (Liabilities)

• Increase Supplies (Asset) and increase Accounts payable (Liabilities)

When an entity pays an entity for their providing internet services, the effect is an increase in

• income

• expense

• liabilities

• asset

A credit entry decreases the balance of

• owner's capital

• income

• liabilities

• expense

A debit entry decreases the balance of

• asset

• owner's drawings

• owner's capital

• expense

A credit entry increases the balance of

• Cash

• owner's drawings

• Service Revenues

• Salaries Expense