TRUE OR FALSE 1. Both sides of the fundamental accounting equation must be equal.
2. Liabilities represent an "inside” interest in a business
3. To keep the fundamental accounting equation in balance debit and credits must be in balance and equal amounts must be on each side of the equation.
4. The accounting equation shows the relationship among the three basic accounting elements assets, revenues, and owner's equity/proprietorship.
5. If owner's equity and liabilities increased during the period, then assets must also have increased
6.Assets are things of value owned by a business entity.
7 Liabilities represent amounts owed to creditors. 8.Revenues received during an accounting period increase owner's equity.
9. Any item a business owns that will provide future benefits is called owner's equity.
10. The accounting equation may be expressed as assets - liabilities = owner's equity.
11. Every transaction is recorded in terms of increases and/or decreases in two or more accounts.
12. The income statement and statement of changes in equity provide information covering a period of time.
13. An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.
14. Revenues decrease owner's equity.
15. Payment of rent decreases the Cash account. 16. Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity,
17. Capital represents the owner's investment, or equity, in a business.
18. In the fundamental accounting equation, assets are added to liabilities.
19. The only way that the fundamental accounting equation can stay in balance is by adding or subtracting equal amounts from both sides of the equation.
20. An owner can invest cash or other assets of value in the business.
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