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Chapter 3 Quiz- Accounting

accounting equation
assets=liabilities+owner’s equity
account
the increases or decreases in a specific item caused by business transactions are recorded in an
accounts payable
amount of money owed to the creditors of a business
accounts receivable
the total amount of money to be received in the future for goods and services sold on credit
asset
any property or item of value owned by a business
business transaction
an economic event that causes a change in assets, liabilities, or owner’s equity
capital
refers to the dollar amount of the owner’s equity in the business
creditor
a person or business that sells property on credit, or any person or business to which money is owed
equities
the total financial claims to the assets of a business
expenses
costs of goods and services used to operate a business
liabilities
the creditor’s claims to the assets of the business
on account
the same as buying on credit
owner’s equity
owner’s claim to the total assets of the business
property
anything of value that is owned or controlled
revenue
income earned from the sale of goods and services
withdrawal
when the owner takes cash or other assets from the business for personal use
false
when you buy property on account, you acquire all of its property rights, true or false
true
one of the purposes of accounting is to provide financial information about property and the rights of a business to that property, true or false
false
a person who has control over but does not own an time of property has a legal right to use that item, true or false
true
both businesses and individuals may own and control property, true or false
false
the creditor’s financial claims minus the owner’s financial claim to an item of property always equals the total cost of the property, true or false
true
the accounting equation should remain in balance after each transaction, true or false
true
a business transaction affects at least two accounts, true or false
false
assets+liabilities=owner’s equity is another way to express the accounting equation, true or false
true
the incases and decreases caused by business transactions are recorded in specific accounts, true or false
true
the free enterprise system is based on the right to own property, true or false
false
the owner’s personal financial transactions are part of the business’s records, true or false
true
the total financial claims to the assets of a business are referred to as equities, true or false
false
the owner’s claims to the assets of a business are liabilities, true or false
false
when a business transaction occurs, the financial position of the business always changes, true or false
true
a creditor has a financial claim to the assets of a business, true or false
false
an account is a record of only the increases in the balance of a specific item such as cash or equipment, true or false
false
the total financial claims do not have to equal the total cost of the property, true or false

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