Accounting Equations Transactions Quiz
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Questions and Answers

What is the left side of the T account called?

  • Owner's equity
  • Debit side (correct)
  • Credit side
  • Chart of accounts
  • Which group of accounts for a business entity is called a ledger?

  • Liabilities
  • Assets
  • Chart of accounts (correct)
  • Drawings
  • What represents the amount of withdrawals made by the owner?

  • Notes payable
  • Drawing account (correct)
  • Accounts receivable
  • Wages payable
  • Which element is the owner's right to the assets of the business?

    <p>Owner's equity</p> Signup and view all the answers

    What are increases in owner's equity as a result of selling services or products to customers?

    <p>Revenues</p> Signup and view all the answers

    What are debts owed to outsiders (creditors)?

    <p>Liabilities</p> Signup and view all the answers

    What is the primary focus of revenue accounts?

    <p>Generating revenues</p> Signup and view all the answers

    How many accounts are involved in recording each business transaction in the double-entry accounting system?

    <p>Two</p> Signup and view all the answers

    What must be equal in every business transaction under the double-entry accounting system?

    <p>Debits and credits</p> Signup and view all the answers

    What is the main focus when recording owner withdrawals in the accounting system?

    <p>Owner's equity</p> Signup and view all the answers

    In which type of account do increases usually equal or exceed decreases?

    <p>Balance sheet accounts</p> Signup and view all the answers

    What is the fundamental principle behind the double-entry accounting system?

    <p>Record every transaction twice</p> Signup and view all the answers

    What impact does Transaction F have on the accounting equation?

    <p>Assets increase, Liabilities decrease, Owner's Equity increase</p> Signup and view all the answers

    How much supplies did NetSolutions use based on Transaction G?

    <p>$800</p> Signup and view all the answers

    What does Transaction H result in regarding the accounting equation?

    <p>Assets decrease, Liabilities decrease, Owner's Equity decrease</p> Signup and view all the answers

    What is the impact of the insurance policy payment on the accounting equation?

    <p>Assets increase, Liabilities increase, Owner's Equity remains unchanged</p> Signup and view all the answers

    Which account is affected when NetSolutions pays creditors on account?

    <p>Accounts Payable</p> Signup and view all the answers

    What does the cost of supplies on hand represent in the accounting equation?

    <p>An asset</p> Signup and view all the answers

    What impact does the payment of rent for December have on NetSolution's accounting equation?

    <p>Assets decrease, Liabilities increase</p> Signup and view all the answers

    In the journal entry for NetSolutions paying rent for December, which column does the amount of $800 go in?

    <p>Debit column of Cash account</p> Signup and view all the answers

    What does NetSolutions receiving $360 for three months' rent beginning December 1 impact their accounting equation?

    <p>Assets increase, Owner's Equity increases</p> Signup and view all the answers

    Which column in the journal would the journal page number be entered for a transaction?

    <p>Post.Ref. column of the account</p> Signup and view all the answers

    What impact does renting out the land to a local retailer have on NetSolutions' accounting equation?

    <p>Assets increase, Owner's Equity decrease</p> Signup and view all the answers

    In the journal entry for NetSolutions renting out the land to a local retailer, where would the account number be entered?

    <p>Post.Ref. column of the journal</p> Signup and view all the answers

    What is the impact on the accounting equation when NetSolutions received $2,870 from fees earned on December 31?

    <p>Assets increase, Liabilities stay the same, Owner's Equity increases</p> Signup and view all the answers

    What is the impact on the accounting equation when fees earned on account totaled $1,120 on December 31?

    <p>Assets increase, Liabilities increase, Owner's Equity increases</p> Signup and view all the answers

    When Chris Clark withdrew $2,000 for personal use on December 31, how did it impact the accounting equation?

    <p>Assets decrease, Liabilities stay the same, Owner's Equity decreases</p> Signup and view all the answers

    Why is preparing a trial balance at the end of each accounting period important?

    <p>To identify errors and ensure debits equal credits</p> Signup and view all the answers

    What is a transposition error in accounting?

    <p>An error in changing the order of digits by mistake</p> Signup and view all the answers

    Which statement correctly represents the impact on Owner's Equity due to drawing funds for personal use?

    <p>Owner's Equity decreases when funds are drawn for personal use</p> Signup and view all the answers

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