Asset Liability Equity Revenue Expense Accounts

Question 1

Examples of Asset categories

Answer 1

Cash, Equipment, Copyrights, Buildings, Land

Question 2

Define equity (capital)

Answer 2

Owner’s claim or investment in the business

Question 3

Define asset

Answer 3

Properties or things of value owned by the business

Question 4

Define creditor

Answer 4

one to whom money is owed

Question 5

What is the accounting equation

Answer 5

assets=liabilities + stockholder equity

Question 6

List asset, liability, equity. Business has a 35,000$ truck, Owner paid off 12,000$, Borrowed 23,000$

Answer 6

35,000 asset. 12,000 liability. 12,000 Equity

Question 7

Why would the total 35,000 be an asset and not just part of it.

Answer 7

Because an asset is recorded at purchase price disregarding how much is paid or borrowed

Question 8

Define liability

Answer 8

it is a debt ( amount a business owes its creditors)

Question 9

Who has first claim on assets, creditor or owner

Answer 9

The creditor has first claim

Question 10

What is important about the accounting equation?

Answer 10

Both sides must add up to the same amount

Question 11

If business invested 17,000, and agency owes 5,000, how much does it have in assets?

Answer 11

$22,000= 17,000+5,000

Question 12

Define Business Transaction

Answer 12

An event with direct monetary impact on business

Question 13

Define Sole Proprietorship

Answer 13

One owner

Question 14

Define cash account

Answer 14

bank deposits and money on hand

Question 15

Define capital

Answer 15

an investment in a business, not always cash, can be equipment

Question 16

Define accounting

Answer 16

analyzing, classifying, recording and summarizing business transactions

Question 17

Classify accounts involved in following: owner deposits 52,000 cash in business account

Answer 17

52,000dollars is cash asset . business account is equity account.

Question 18

Investing 52,000 increases/decreases which accounts

Answer 18

increases cash account, increases equity account

Question 19

Define double entry accounting

Answer 19

Every transaction is recorded in two accounts(can be on the same side of the Accounting Equation)

Question 20

Double entry example. Business (not the owner)spends 38,000 of its cash on equipment

Answer 20

Assets decreases cash by 38,000

Asset also has Equipment increased by 38,000. Liability and Equity Do not come into play

Question 21

What is an account?

Answer 21

A specific account name that is is either an asset account, liability account , or equity account

Question 22

A business adding equipment increases which account

Answer 22

equipment account

Question 23

A business buying on credit increases which account

Answer 23

accounts payable

Question 24

Note, from now on accounting equation is shortened to AE and account is ACC

Answer 24

Note, from now on accounting equation is shortened to AE and account is ACC

Question 25

If the business (not the owner) pays 2,000 of liabilities, what changes on AE

Answer 25

Assets decrease by 2,000

Liabilities decrease by 2,000

Question 26

If the business (not the owner) pays 2,000 of liabilities, what changes on ACC

Answer 26

cash decreased, accounts payable decreased

Question 27

Define present worth

Answer 27

current fair market value

Question 28

If the owner sets up an account named adventure, what account is used for equity investment

Answer 28

The account name + the word capital. Thus: Adventure, Capital