QUIZ- The Accoun ng Equa on and the Double Entry System

1. The first step in analyzing a transac on is to determine what accounts are involved.
2. Capital represents the owner's investment, or equity, in a business.
3. When a business receives cash, it is always recorded as an increase to Cash and a decrease to an
expense.
4. Liabili es represent amounts owed to creditors.
5. In the fundamental accoun ng equa on, assets are added to liabili es.
6. Business transac ons are expressed in terms of money.
7. Accounts Receivable is considered an asset.
8. An owner can invest cash or other assets of value in the business.
9. Both sides of the fundamental accoun ng equa on must always be equal.
10. The liability created when supplies are bought on account is called an account payable.
11. Equipment is listed as an asset because it is used up in a rela vely long period of me.
12. The owner's Withdrawals account is listed with the other expenses of a business.
13. A withdrawal by the owner is recorded as a deduc on from assets and an increase in expenses.
14. Assets are things of value owned by a business en ty.
15. Every transac on is recorded in terms of increases and/or decreases in two or more accounts.