Chapter Review Questions

CHAPTER ONE

(UNIT TWO)

1) Equipment with an estimated market value of $55,000 is offered for sale at $75,000. The equipment is acquired for $20,000 in cash and a note payable of $40,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is

$55,000

2) The asset created by a business when it makes a sale on account is termed

Accounts receivable

3) The accounting equation may be expressed as

Assets - Liabilities = Owner's Equity

4) Owner's withdrawals

Decrease owner's equity

5) If beginning capital was $70,000, ending capital is $48,000, and the owner's withdrawals were $21,000, the amount of net income or net loss was

Net loss of $1,000

6) Owned resources of a business are referred to as

Assets

7) How does paying a liability in cash affect the accounting equation?

Assets decrease; liabilities decrease

8) A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

Decrease an asset, decrease a liability

9) Earning revenue

Increases assets, increases owner's equity

10) How does the purchase of equipment by signing a note affect the accounting equation?

Assets increase; liabilities increase

CHAPTER TWO

(UNIT THREE)

1) Which of the following entries records the payment of an account payable?

Debit Accounts Payable; credit Cash

2) A credit balance in which of the following accounts would indicate a likely error?

Salary Expense

3) A chart of accounts is

Usually a listing of accounts in financial statement order

4) Which of the following is not a short-cut in finding errors on the trial balance?

Determine the amount and change any account to make the trial balance correct.

5) Which of the following entries records the payment of rent for the current month?

Rent Expense, debit; Cash, credit

6) The debit side of an account

Is the left side of the account

7) Joshua Scott invests $65,000 into his new business. How would the...