Basic Financial Accounting

The liability created when supplies are bought on account is called an accounts payable

• True

• False

Assets are things of value owned by a business entity

• True

• False

Every transaction is recorded in terms of increases and/or decreases in two or more accounts

• True

• False

Liabilities represent amounts owed to creditors.

• True

• False

In the fundamental accounting equation, assets are added to liabilities

• True

• False

Business transactions are expressed in terms of money

• True

• False

When a business receives cash, it is always recorded as an increase to Cash and a decrease to an Expense

• True

• False

Both sides of the fundamental accounting equation must always be equal

• True

• False

Determine the effect of transaction:

Invested cash in the business

• Increase in one asset; decrease in another asset

• Increase in asset; increase in liability

• Increase in asset; increase in owner's equity

• Decrease in asset; decrease in liability

Determine the effect of transaction:

Bought spray equipment on account

• Increase in asset; increase in another asset

• Increase in asset; increase in liability

• Increase in asset; Increase in owner's equity

• Decrease in asset; decrease in liability