Chapter 2 Quiz

Question 1

Withdrawing cash from a business entity will result in a decrease in owner’s equity. T/F

Answer 1

true

Question 2

According to the business entity concept, a proprietor may not include nonbusiness assets and liabilities in the business entity’s accounting records. T/F

Answer 2

true

Question 3

The balance sheet reports assets, liabilities, and owner’s equity covering a period of time. T/F

Answer 3

false

Question 4

Funeral fees earned

Answer 4

revenue

Question 5

utility expense

Answer 5

expense

Question 6

accounts payable

Answer 6

liability

Question 7

Tom Jones, Drawing

Answer 7

withdrawal

Question 8

Prepaid rent

Answer 8

asset

Question 9

Tom Jones, Capital

Answer 9

owner’s equity

Question 10

The excess of total revenues over total expenses for the period

Answer 10

net income

Question 11

An amount owed to a business by its customers as a result of the sale of goods or services

Answer 11

accounts receivable

Question 12

Reports beginning capital, plus net income, less withdrawals to compute ending capital

Answer 12

statement of owner’s equity

Question 13

A formal written promise to pay a supplier or lender a specified sum of money at a definite future time.

Answer 13

notes payable

Question 14

Reports assets, liabilities, and owner’s equity on a specific date

Answer 14

balance sheet

Question 15

Reports the profitability of business operations for a specific period of time

Answer 15

income statement