Ch. 1 Accounting Equation / Business Transactions

Question 1

what is the accounting equation?

Answer 1

assets = liabilities + equity

Question 2

asset

Answer 2

the resources owned by a business

Question 3

liability

Answer 3

debts owed to the creditors

Question 4

equity

Answer 4

the stockholder’s right to the assets of the business

Question 5

examples of assets

Answer 5

cash, land, building, equipment, supplies, accounts receivable

Question 6

examples of liabilities

Answer 6

accounts payable, notes payable, loans

Question 7

examples of equity

Answer 7

common stock, retained earnings

Question 8

what are the two types of equity?

Answer 8

stockholders and owners

Question 9

what is a business transaction?

Answer 9

an economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations

Question 10

the accounting equation will always stay in __________.

Answer 10

balance

Question 11

issued common stock in exchange for cash will __________ equity.

Answer 11

increase

Question 12

received cash for services performed for customers will __________ equity.

Answer 12

increase

Question 13

paid business expenses will __________ equity.

Answer 13

decrease

Question 14

paid dividends will __________ equity.

Answer 14

decrease

Question 15

debit on the __________

Answer 15

left

Question 16

credit on the __________

Answer 16

right