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Accounting, Vol. 1, 9e Cdn. Ed. (Horngren et al.)
Chapter 2 Recording Business Transactions
Objective 2-1
1) The basic summary device of accounting is the account.
Answer: TRUE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
2) Notes receivable is a liability account.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
3) A chart of accounts is a list of all of a company’s accounts with their account numbers.
Answer: TRUE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
4) A chart of accounts is organized in order of the accounting equation, with assets first, followed by
liabilities and owner’s equity.
Answer: TRUE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
5) The ledger is the first book of entry for a business transaction.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
6) An account receivable for the selling company is an account payable for the purchasing company.
Answer: TRUE
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-1 Define and use key accounting terms
2
7) The basic summary device of accounting is the:
A) ledger.
B) account.
C) debit.
D) credit.
Answer: B
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
8) Accounts are grouped in a book called the:
A) trial balance.
B) chart of accounts.
C) journal.
D) ledger.
Answer: D
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
9) All of the following are assets except:
A) cash.
B) accounts receivable.
C) land.
D) accounts payable.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
10) An organization’s list of all its accounts and the related account numbers is called a:
A) balance sheet.
B) chart of accounts.
C) ledger.
D) trial balance.
Answer: B
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
3
11) A chart of accounts is:
A) a source document.
B) another name for a trial balance.
C) a list of all of the accounts of an organization and their related account numbers.
D) prepared as the last step in analyzing transactions.
Answer: C
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
12) Which of the following is a revenue account?
A) accounts receivable
B) accumulated amortization
C) unearned revenue
D) sales
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-1 Define and use key accounting terms
13) Which of the following most completely describes businesses that use a chart of accounts?
A) service but not merchandising or manufacturing businesses
B) merchandising but not service or manufacturing businesses
C) manufacturing but not service or merchandising businesses
D) Service, merchandising, and manufacturing businesses all use a chart of accounts.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
14) The year end balance in the capital account is determined by:
A) the change in cash from the beginning to the end of the year.
B) the beginning capital balance, investments, net income or loss, and withdrawals.
C) only investments and withdrawals.
D) the change in total assets from the beginning to the end of the year.
Answer: B
Diff: 3
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-1 Define and use key accounting terms
4
Match the following.
A) account
B) ledger
C) journal
D) chart of accounts
15) The basic summary device of accounting
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
16) The book of accounts
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
17) The chronological record of an entity’s transactions
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
18) A list of all an entity’s accounts and their account numbers
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
Answers: 15) A 16) B 17) C 18) D
5
For the items listed below, choose the appropriate code letter to indicate whether the item is an asset,
liability, owner’s equity, revenue, expense or withdrawal item:
Asset A
Liability L
Owner’s Equity OE
Revenue R
Expense E
Withdrawal W
19) Accounts receivable
Diff: 1
Learning Outcome:
Skill: Knowledge
A-03 Analyze and record transactions and their effects on the financial statements
Objective: 2-1 Define and use key accounting terms
20) Service revenue
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
21) Salary expense
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
22) Accounts payable
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
23) Office supplies
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
24) Cash
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
6
25) Note payable
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
26) Tim Brown, Capital
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
27) Building
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
28) Tim Brown, withdrawals
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
29) Land
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
30) Truck
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
31) Rent expense
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
32) Furniture
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
7
33) Equipment
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
34) Supplies expense
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-1 Define and use key accounting terms
Answers: 19) A 20) R 21) E 22) L 23) A 24) A 25) L 26) OE 27) A 28) W 29) A 30) A 31) E 32) A 33) A
34) E
Objective 2-2
1) A transaction always involves exactly two accounts.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
2) The right-hand side of an account is called the increase side.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
3) Assets, revenues, and withdrawals are all increased by debits.
Answer: FALSE
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
4) Total debits must always equal total credits.
Answer: TRUE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
8
5) The right side of the account is the correct side.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
6) The normal balance of account Accounts Payable is a debit.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
7) The purchase of equipment by issuing a note payable would involve a debit to note payable.
Answer: FALSE
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
8) The purchase of a building with a down payment of cash and the signing of a note payable for the
remainder would include a debit to building and a credit to note payable and to cash.
Answer: TRUE
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
9) The normal balance of a revenue account is a credit.
Answer: TRUE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
10) Double-entry accounting means entering business transactions twice to avoid possible errors.
Answer: FALSE
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
9
11) Credit is a term representing:
A) the right side of an account.
B) an increase.
C) a decrease.
D) the left side of an account.
Answer: A
Diff: 1
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
12) Which of the following groups of accounts have normal debit balances?
A) assets, revenues, and owner withdrawals
B) assets, expenses, and owner withdrawals
C) assets, liabilities, and capital
D) assets, revenues, and expenses
Answer: B
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
13) The normal balance of an expense is a ________ while the normal balance of an asset is a ________.
A) debit, credit
B) debit, debit
C) credit, credit
D) credit, debit
Answer: B
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
14) The normal balance of a liability is a ________ while the normal balance of revenue is a ________.
A) credit, debit
B) debit, debit
C) debit, credit
D) credit, credit
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
10
15) Incurring an expense in the current accounting period, which is paid in the current accounting period,
will require:
A) a debit to an expense and a credit to a liability.
B) a debit to a liability and a credit to an expense.
C) a debit to an expense and a credit to cash.
D) a debit to an expense and a credit to capital.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
16) Incurring an expense in the current accounting period, which will be paid in the following accounting
period, will require:
A) a debit to an expense and a credit to a liability.
B) a debit to a liability and a credit to an expense.
C) a debit to an expense and a credit to cash.
D) a debit to an expense and a credit to capital.
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
17) The withdrawal of cash by the owner for personal use would include a:
A) debit to the owner’s capital account.
B) credit to the owner’s withdrawals account.
C) credit to the owner’s capital account.
D) debit to the owner’s withdrawals account.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
18) An owner investment of cash into the business would include a:
A) debit to capital.
B) credit to withdrawals.
C) debit to withdrawals.
D) credit to capital.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
11
19) Purchasing a truck by signing a note payable would include a:
A) credit to truck.
B) debit to note payable.
C) credit to note payable.
D) debit to truck expense.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
20) Performing a service on account would include a:
A) debit to accounts payable.
B) credit to accounts payable.
C) credit to the cash.
D) credit to service revenue.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
21) The normal balance of cash is a ________ because it is a(n) ________ account.
A) debit, expense
B) credit, asset
C) debit, asset
D) credit, revenue
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
22) The normal balance of notes payable is a ________ because it is a(n) ________ account.
A) debit, expense
B) credit, revenue
C) debit, asset
D) credit, liability
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
12
23) The normal balance of wages payable is a ________ because it is a(n) ________ account.
A) credit, liability
B) credit, revenue
C) credit, owner’s equity
D) credit, asset
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
24) The normal balance of land is a ________ because it is a(n) ________ account.
A) debit, expense
B) credit, asset
C) debit, asset
D) credit, revenue
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
25) The purchase of equipment for cash would:
A) increase total assets.
B) increase total assets and decrease liabilities.
C) decrease both liabilities and owner’s equity.
D) have no effect on total assets.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
26) An owner investment of a building, valued at $200,000, along with a $55,000 outstanding mortgage,
into an entity would:
A) increase owner’s equity $145,000.
B) increase total assets $55,000.
C) decrease liabilities $145,000.
D) increase owner’s equity $200,000.
Answer: A
Diff: 3
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Analysis
Objective: 2-2 Apply the rules of debit and credit
13
27) Performing services on account would:
A) increase net income, decrease total assets, and decrease owner’s equity.
B) increase net income, increase owner’s equity, and increase total assets.
C) increase total assets and liabilities.
D) decrease total assets, increase net income, and increase owner’s equity.
Answer: B
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
28) The payment of the owner’s personal expenses from the business’s chequebook should be recorded
with a debit to:
A) withdrawals.
B) accounts payable.
C) cash.
D) capital.
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
29) The account debited when supplies are purchased on account is:
A) accounts payable.
B) cash.
C) capital.
D) supplies.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
30) The account credited when cash is received from a customer on account is:
A) cash.
B) accounts payable.
C) accounts receivable.
D) service revenue.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
14
31) The owner withdrawing cash for personal use would:
A) have no effect on assets.
B) decrease owner’s equity.
C) decrease net income.
D) increase assets.
Answer: B
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
32) An advertising bill received in the current period that will be paid the following period would:
A) decrease liabilities.
B) have no effect on liabilities.
C) increase net income.
D) decrease owner’s equity.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
33) The account debited when payment is made for equipment purchased previously on account is:
A) accounts payable.
B) cash.
C) accounts receivable.
D) equipment.
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
34) The purchase of a building by signing a note payable would:
A) increase owner’s equity.
B) decrease total liabilities.
C) have no effect on owner’s equity.
D) decrease total assets.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
15
35) The purchase of a building by signing a note payable would:
A) increase owner’s equity.
B) increase total liabilities.
C) decrease owner’s equity.
D) decrease total assets.
Answer: B
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
36) The investment of cash into the business by the owner would:
A) increase net income.
B) decrease owner’s equity.
C) have no effect on liabilities.
D) decrease assets.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
37) The payment of an amount owed to a supplier would:
A) have no effect on total assets or liabilities.
B) increase owner’s equity and liabilities.
C) decrease net income and increase assets.
D) decrease assets and liabilities.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
38) The payment of salaries to employees for wages of the current period would:
A) increase owner’s equity and decrease liabilities.
B) increase net income and decrease assets.
C) decrease assets and owner’s equity.
D) increase assets and decrease owner’s equity.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
16
39) Performing a service for cash would:
A) affect the accounting equation the same as if the service was performed on account.
B) increase assets more than if the service had been performed on account.
C) increase net income less than if the service had been performed on account.
D) decrease expenses more than if the service had been performed on account.
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
40) Performing a service on account would:
A) affect the accounting equation the same as if the service was performed for cash.
B) increase assets more than if the service had been performed for cash.
C) increase net income less than if the service had been performed for cash.
D) decrease expenses more than if the service had been performed for cash.
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
41) Performing a service and immediately collecting the cash would:
A) increase net income less than if the service had been performed on account.
B) increase assets more than if the service had been performed on account.
C) increase owner’s equity less than if the service had been performed on account.
D) have no effect on liabilities.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
42) The journal entry to record the payment of a telephone bill immediately upon receipt of the bill
would:
A) have no effect on owner’s equity.
B) decrease liabilities.
C) decrease owner’s equity.
D) increase owner’s equity.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
17
43) Making a payment on account of a liability would:
A) decrease assets and increase liabilities.
B) increase liabilities and decrease owner’s equity.
C) decrease assets and decrease liabilities.
D) decrease assets and increase net income.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
44) Receiving a payment from a customer on account would:
A) increase both assets and owner’s equity.
B) increase net income and decrease liabilities.
C) have no effect on total assets or owner’s equity.
D) decrease liabilities and increase owner’s equity.
Answer: C
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
45) An owner investment of equipment into the business would:
A) increase net income.
B) have no effect on total assets.
C) have no effect on owner’s equity.
D) have no effect on liabilities.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
46) An owner withdrawal of $20,000 cash would:
A) decrease owner’s equity and increase assets by $20,000.
B) increase owner’s equity and decrease liabilities by $20,000.
C) increase liabilities and assets by $20,000.
D) decrease assets and owner’s equity by $20,000.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Application
Objective: 2-2 Apply the rules of debit and credit
18
47) In the double-entry accounting system each transaction:
A) involves exactly two accounts.
B) involves at least two accounts.
C) involves an asset account and a liability account.
D) involves a liability account and an equity account.
Answer: B
Diff: 3
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
48) Owner equity accounts include:
A) assets, liabilities and capital.
B) assets, revenues and expenses.
C) only the capital and withdrawal accounts.
D) the revenue, expense, capital and withdrawal accounts.
Answer: D
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Knowledge
Objective: 2-2 Apply the rules of debit and credit
49) Which of the following is correct?
A) liabilities = assets – owner’s equity
B) owner’s equity = assets + liabilities
C) assets = liabilities – owner’s equity
D) assets = owner’s equity – liabilities
Answer: A
Diff: 2
Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements
Skill: Comprehension
Objective: 2-2 Apply the rules of debit and credit
