Chapter 2 Analyzing Transactions: The Accounting Equation

Question 1

is an individual, association, or organization that engages in economic activities

Answer 1

business enity

Question 2

are items that are owned by a business

Answer 2

assets

Question 3

businesses may also have an asset called

Answer 3

accounts receivable

Question 4

represents something owned to another business entity

Answer 4

liabilities

Question 5

is an unwritten promise to pay a supplier for assets purchased or serviced received

Answer 5

account payable

Question 6

Formal written promises to pay suppliers or lenders specified sums of money are known as

Answer 6

notes payable

Question 7

is the amount by which the business assets exceed the business liabilities

Answer 7

Owner’s equity

Question 8

nonbusiness assets and liabilities are not included in the business entity”s accounting records

Answer 8

business entity concept

Question 9

The relationship between the three basic accounting elements –assets, liabilities, and owners’s equity–can be expressed in the form of a simple equation known as the

Answer 9

accounting equation

Question 10

is an economic event that has a direct impact on the business

Answer 10

business transaction

Question 11

is a separate record use to summarize changes in each assets, liability, and owners’s equity of a business

Answer 11

account

Question 12

provide a description of the particular type of asset, liability, or owner’s equity

Answer 12

account titles

Question 13

represent the amount a business charges customer s for product sold or services preformed.

Answer 13

revenues

Question 14

represent the decrease in assets(or increase in liabilities) as a result of a company’s efforts to produce revenues.

Answer 14

expenses

Question 15

If total revenues are grater than total expenses for the period, the excess is the

Answer 15

net income

Question 16

if total expenses are grater than total revenues for the period, for the period, the excess is a

Answer 16

net loss

Question 17

The concept that income determination can be made on a periodic basis is known as the

Answer 17

accounting period concpet

Question 18

any accounting period of 12 months is called 1

Answer 18

fiscal year

Question 19

reduces owner’s equity as a result of the owner taking cash and other assets out of the business

Answer 19

withdrawals or drawings

Question 20

Assets=Liabilities+

Answer 20

Owner’s Equity

Question 21

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

Answer 21

balance sheet

Question 22

The balance sheet is referred to as a

Answer 22

statement of financial position or statement of financial condition

Question 23

business transactions provide to the necessary

Answer 23

input

Question 24

recognizing the effect of these transactions on the assets, liabilities, and owner’s equity, revenue, and expeses of a business is the function

Answer 24

processing

Question 25

The financial statement are the

Answer 25

output