Chapter 1 Practice Questions
Identify the choice that best completes the statement or answers the question.
A business started the current period with liabilities of $71,000 and Equity of $37,000. During the period
the following business transactions took place.
1. Purchased equipment for $43,000; paying $17,000 cash and issuing a note payable for the balance.
2. Received $2,700 of the amount owed by a customer for services provided on account.
3. Paid $5,700 of the amount owed for supplies purchased on account.
4. Provided services of $3,500 on account.
5. Paid $1,900 towards rent for the current period.
Determine the Assets
of the business at the end of the period.
A company prepares
four basic financial statements:
1.Balance Sheet 2. Statement of Cash Flows 3. Statement of Retained Earnings 4. Income Statement.
These are prepared in the following order
Since the accounting equation must remain in balance after each transaction, a transaction that causes an
increase in an asset, may also cause
An increase in a liability
An increase in another asset
A decrease in owner’s equity
A decrease in a liability
An example of resources owned by a company is