CHAPTER 3:
Section 2 Transactions That Affect Owner’s Investment, Cash, and Credit
1.
When a business buys an item on credit, it is buying
a.
on sale
b.
on account
c.
on-line
d.
on the cusp
2.
Accounts Receivable is
a.
a liability account
b.
an equity account
c.
an asset account
d.
none of the above
3.
If the owner of a business transferred a telephone from her home to the business, the account credited would be
a.
Owner`s Capital
b.
Office Equipment
c.
Cash
d.
the Phone Company
4.
If a business purchased a new computer system for cash the account debited would be
a.
Accounts Receivable
b.
Computer Software
c.
Computer Equipment
d.
Cash
5.
The purchase of a desk on account will increase Office Furniture and will also increase
a.
Cash in Bank
b.
Accounts Payable
c.
Accounts Receivable
d.
Owner`s Capital
6.
An economic event that causes an increase or decrease in assets, liabilities, or owner`s equity is called
a.
accounts receivable
b.
an account
c.
a business transaction
d.
accounts payable
7.
If an owner deposits $30,000 in the business checking account, the two accounts affected are
a.
Accounts Payable and Money I Owe My Mother-in-Law
b.
Cash in Bank and Owner`s Capital
c.
Cash in Bank and Accounts Payable
d.
Accounts Receivable and Accounts Payable
8.
Accounts Payable is
a.
an asset account
b.
an equipment account
c.
an owner`s equity account
d.
a liability account