Questions:
1. The accounting equation can be stated as:
a. Assets = Liabilities - Owner's Equity
b. Assets - Liabilities = Owner's Equity
c. Liabilities = Assets + Owner's Equity
d. Owner's Equity = Assets + Liabilities
2. Receiving cash from a customer in payment of an account receivable would:
a. decrease total assets and increase owner's equity
b. increase owner's equity and increase liabilities
c. increase total assets and decrease liabilities
d. have no effect on total assets or owner's equity
3. Borrowing money and signing a note payable would:
a. increase total assets and increase liabilities
b. decrease liabilities and increase total assets
c. increase liabilities and increase owner's equity
d. increase total assets and increase owner's equity
4. The financial statement that presents a summary of the revenues and expenses of an entity is called the:
a. statement of owner's equity
b. statement of financial position
c. income statement
d. balance sheet