Fund of Accounting Chapter 1 Concepts

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Multiple choice and true false questions that apply to the concepts covered in chapter one of our fundamentals of accounting book.

Limited resources, unlimited liability, limited expertise, limited life and obligation to follow the laws of both federal government and state and city government in which a business is formed.

List 5 disadvantages to a Sole Proprietorship.

Ease of formation, total control by the owner, profits are not shared.

List 3 advantages to a sole proprietorship.

True

True or False: unlimited liability means the owner is totally responsible for the liabilities of a business. Personal assets such as a car could be claimed to cover the business's liabilities.

d. all of the above

Which of the following is an example of a service business: a. Hair Salon, b. Auto Repair Shop, c. Daycare, d. all of the above

Assets = Liabilities + Owner's Equity

The accounting equation is most often stated as:

True

True or False: In the accounting equation, if one account is increased, another account on the same side of the equation must be decreased.

False

True or False: When changes are made on only one side of the accounting equation, the equation is no longer in balance.

B

When cash is received from sales, the owner's equity: A. Decreases B. Increases C. Remains the same.

B

When services are sold on account, the owner's equity: A. Decreases B. Increases C. Remains the Same

A

When cash is paid for an expense, the owner's equity: A. Decreases B. Increases C. Remains the Same

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