There are no Test Questions for Chapter 1.

Chapter 1 There are no Test Questions for Chapter 1.College Accounting, Chapters 1-27, 21e James Heintz Robert Parry (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

Chapter 2—Analyzing Transactions: The Accounting Equation

TRUE/FALSE

1.A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities.ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-03-Business Forms KEY: Bloom's: Knowledge

NOT: 1 min.

2.Liabilities represent an "inside" interest in a business.ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-03-Business Forms KEY: Bloom's: Knowledge

NOT: 1 min.

3.The accounting equation shows the relationship among the three basic accounting elements⎯assets, revenues, and owner's equity.ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

4.If owner's equity and liabilities increased during the period, then assets must also have increased.ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

5.An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

6.If the revenue of a period exceeds the expenses, the excess represents a net loss.ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-09-Financial Statements KEY: Bloom's: Evaluation

NOT: 1 min. 2 / 4

• Any accounting period of twelve months' duration is usually referred to as a calendar year.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• Revenues received during an accounting period increase owner's equity.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge

NOT: 1 min.

• Since supplies last for several months, they are recorded as assets.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: BUSPROG: Communication STA: AICPA FN-Measurement TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• Since insurance lasts for several months, it is recorded as owner's equity.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: BUSPROG: Communication STA: AICPA FN-Measurement TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• The income statement provides information about events over a period of a month, year, or other

period of time.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge

NOT: 1 min.

• The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the

balance sheet.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge

NOT: 1 min.

• Other terms used for owner's equity include net worth and capital.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• / 4

• Any item a business owns that will provide future benefits is called owner's equity.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• It is not necessary to measure a business transaction in dollars.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• The accounting equation may be expressed as assets − liabilities = owner's equity.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in

the business entity's accounting records.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Communication STA: AICPA BB-Industry TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• Recognizing the effects of transactions on assets, liabilities, owner's equity, revenue, and expenses of a

business is the processing function.

ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: BUSPROG: Communication STA: AICPA FN-Measurement TOP: ACBSP: APC-06-Recording Transactions KEY: Bloom's: Comprehension

NOT: 1 min.

• Expenses represent a decrease in liabilities.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: BUSPROG: Communication STA: AICPA FN-Measurement TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge

NOT: 1 min.

• Expenses that are incurred in operating the enterprise increase owner's equity.

ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: BUSPROG: Communication STA: AICPA FN-Measurement TOP: ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension

NOT: 1 min.

• / 4