(Test Bank) College Accounting A Practical Approach, Canadian Edition

Slater, 14

Business

Test Bank

14th Edition

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Test Bank for College Accounting A Practical Approach, Canadian Edition, The downloadable file consists of 410 pages, and the total size of the file is 4.76 MB. Purchase now only for highly discounted price.

Author(s): Slater

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1)The heading of a balance sheet (in correct order) would include A)who, what, when B)who, what, why C)who, where, when. D)why, what, where1) 2)The financial statement that shows revenue and expenses for a period of time is the A)income statement. B)statement of owner's equity. C)balance sheet. D)statement of cash flows.2) 3)Which of the following would have claims against the assets of the business? A)Cash and Equipment B)Cash and liabilities C)Liabilities and owner's equity D)Equipment and liabilities3) 4)The balance sheet contains A)expenses, assets and cash. B)assets, liabilities and owner's equity. C)assets, liabilities and revenues. D)liabilities, expenses and capital.4) 5)Go Blue Retail Store collected $12,000 of its accounts receivable. The expanded accounting equation changes include A)Cash and Revenue increase $12,000. B)Cash increases and Accounts Receivable decreases $12,000. C)Accounts Receivable decreases and Capital increases $12,000. D)Cash and Capital increase, $12,000.5) 6)The claims of creditors against the assets of a business are A)liabilities. B)expenses. C)assets. D)revenues.6) 7)How does the purchase of equipment on account affect the accounting equation? A)Assets increase; owner's equity increases. B)Liabilities increase; owner's equity decreases. C)Assets increase; liabilities increase. D)Assets increase; liabilities decrease.7) 8)Boxes R' Us paid $2,000 in salaries and wages for February. This transaction will A)increase expenses and increase liabilities. B)decrease assets and expenses. C)increase expenses and decrease revenue. D)decrease assets and increase expenses.8) 9)When the company pays salaries, which of the following is true? A)Assets and Expenses increase. B)Liabilities and Capital increase. C)Assets and Capital increase. D)None of the above are correct.9) 10)Which of the following would be considered a subdivision of owner's equity? A)Liabilities B)Cash C)Expenses D)Assets10) 1CHAPTER 111)An expense should be recorded whenA)the expense is incurred.B)a bill is received in the mail.C)the bill is paid.D)None of the above are correct.11)12)The purchase of supplies for cash would affect which account category?A)CapitalB)AssetsC)LiabilitiesD)Expense12)13)Revenue, expenses, and withdrawals are subdivisions ofA)owner's equity.B)assets.C)liabilities.D)All of these answers are correct.13)14)An acceptable variation of the accounting equation isA)Assets = Liabilities - Owner's Equity.B)Assets - Liabilities = Owner's Equity.C)Assets + Owner's Equity = Liabilities.D)All of these answers are correct.14)15)This type of business organization is subject to income tax.A)sole proprietorship.B)corporation.C)partnership.D)All of the above.15)16)Bob Allen's Company sells a machine it purchased last week for cash equivalent to the originalcost of $15,000. This has the effect ofA)decreasing liabilities and increasing owner's equity.B)decreasing assets and increasing owner's equity.C)no change to the overall accounting equation.D)decreasing assets and decreasing liabilities.16)17)Hazy Shades received and paid a utility bill for $725 for the month of March. This transactionwillA)increase Cash and increase Utility Expense.B)increase Cash and decrease Utility Expense.C)decrease Cash and increase Utility Expense.D)increase Utility Expense and decrease Withdrawal.17)18)A Toyota plant would be considered aA)service company.B)merchandise company.C)manufacturer.D)None of the above are correct.18)19)If total liabilities are $15,000 and owner's equity is $7,000, the total assets must beA)$8,000.B)$15,000.C)$22,000.D)$7,000.19)20)A purchase of a vehicle for cash would have what affect on the accounting equation?A)Total asset amount remains the same.B)Total liabilities are overstated.C)Total owner's equity is overstated.D)Both A and B are correct.20)21)The basic accounting equation isA)Assets = Liabilities - Owner's Equity.B)Assets = Liabilities + Owner's Equity.C)Assets = Owner's Equity - Liabilities.D)Assets = Revenues - Expenses.21)222)Which of the following is correct when speaking about a business's assets?A)Assets are shown at their resale value.B)Assets are things of value owned.C)Assets must always equal Liabilities.D)Assets are disclosed on the Income Statement.22)23)If a company's revenues are lower than its expenses, it will causeA)an increase in owner's equity.B)a decrease in owner's equity.C)no effect on owner's equity.D)an increase in assets.23)24)The type of business organization that can continue indefinitely is known as aA)sole proprietorship.B)corporation.C)partnership.D)None of the above.24)25)If total assets are $30,000 and total liabilities are $8,000, Capital must equalA)$8,000.B)$30,000.C)$22,000.D)$38,000.25)26)Bob purchased a new computer for the company on account. The transaction willA)increase Computer; increase Accounts Payable.B)increase Computer; increase Capital.C)decrease Cash; increase Computer.D)decrease Cash; increase Accounts Payable.26)27)The Owner's Equity of Leyla's Company is equal to one-quarter of the total assets. Liabilitiesequal $30,000. What is the amount of Owner's Equity?A)$40,000B)$30,000C)$10,000D)None of these answers are correct.27)28)Sonya invested cash in her new business. What effect will this have?A)Decrease an asset and increase a liability.B)Increase an asset and decrease owner's equity.C)Increase an asset and increase a liability.D)Increase an asset and increase owner's equity.28)29)Which of the following transactions would cause one asset to increase and another asset todecrease?A)The business bought supplies for cash.B)The business paid a creditor.C)The business bought inventory on credit.D)The owner invested cash in the business.29)30)Accounting provides information toA)investors.B)government.C)managers.D)All of these answers are correct30)31)When services are rendered but payment is not made, which account would be increased?A)RevenueB)ExpenseC)CashD)Accounts Payable31)332)If beginning capital was $100,000, ending capital is $85,000, and the owner's withdrawals were$10,000, the amount of net income or net loss wasA)net loss of $15,000.B)net loss of $5,000.C)net income of $15,000.D)net income of $5,000.32)33)An accounting report that shows the changes in capital during the accounting period isA)an income statement.B)a balance sheet.C)a statement of owner's equity.D)All of these answers are correct.33)34)A business paid $5,800 to a creditor in payment of an amount owed. The effect of the transactionon the accounting equation was toA)increase one asset, decrease another asset.B)increase an asset, increase owner's equity.C)increase an asset, increase a liability.D)decrease an asset, decrease a liability.34)35)Stephanie purchased $10,000 of new electronic equipment for her DJ Company on account. Theeffect on the basic accounting equation was toA)increase Cash $10,000 and increase Equipment $10,000.B)decrease Cash $10,000 and increase Accounts Payable $10,000.C)decrease Cash $10,000 and increase Equipment $10,000.D)increase Equipment $10,000 and increase Accounts Payable $10,000.35)36)Assets are equal toA)liabilities - revenues.B)revenues - expenses.C)liabilities - owner's equity.D)liabilities + owner's equity.36)37)Which of the following is a characteristic of a sole proprietorship?A)Easy to formB)Can continue indefinitelyC)Each shareholder acts as an owner of the companyD)Business owned by more than one person37)38)An accounting firm would be considered aA)service company.B)manufacturer.C)merchandise company.D)None of the above are correct.38)39)A legal firm would be considered aA)manufacturer.B)merchandise company.C)service company.D)None of the above are correct.39)40)If total liabilities are $22,000 and owner's equity is $17,000, the total assets must beA)$39,000.B)$20,000.C)$17,000.D)$5,000.40) 441)Victoria received $500 from customers in partial payment for accounting services performedpreviously. The recording of this transaction wouldA)decrease Accounts Receivable and increase Victoria's Capital $500.B)increase Cash and increase Accounts Receivable $500.C)increase Cash and Victoria's Capital $500.D)increase Cash and decrease Accounts Receivable $500.41)42)A sample of a liability account isA)Fees Earned.B)Supplies.C)Accounts Receivable.D)Accounts Payable.42)43)Farrah's investment of cash and equipment in her existing business willA)increase assets and liabilities.B)decrease assets and increase a liability.C)decrease assets and increase owner's equity.D)increase assets and owner's equity.43)44)A partnership is a business which isA)ends with the death of a partner.B)easy to form.C)owned by more than one person.D)All of these answers are correct.44)45)Not-for-profit organizationsA)aim to improve society in some way.B)seek to maximize profits.C)usually obtain funding from donations and government grants.D)Both A and C are correct.45)46)If 'Ol Fashioned Toys' revenues are less than its expenses during the accounting periodA)owner's withdrawals decrease net income.B)the business will incur a loss.C)net income causes liabilities to decrease.D)owner's withdrawals increase owner's equity.46)47)The claims of owners against the assets of a business areA)owner's equity.B)expenses.C)revenues.D)liabilities.47)48)Kal's Vegan Restaurant, with total assets of $80,000, borrows $25,000 from the bank. Which ofthe following is a TRUE statement upon borrowing the money?A)Total assets are now $80,000.B)Total assets are now $25,000.C)Total assets are now $55,000.D)Total assets are now $105,000.48)49)The purchase of a computer with on account was recorded as a cash purchase. Due to this errorA)assets would be understated.B)owner's equity would be overstated.C)liabilities would be overstated.D)None of the above are correct.49) 550)If total liabilities increased by $10,000 and the assets increased by $4,000 during the accountingperiod, what is the change in the owner's equity amount?A)Decrease of $6,000B)Decrease of $10,000C)Increase of $6,000D)Increase of $4,00050)51)A Hallmark store would be considered aA)service company.B)merchandise company.C)manufacturer.D)None of the above are correct.51)52)Which is an advantage of a sole proprietorship form of business?A)The owner makes all the decisions.B)The business can continue indefinitely.C)There is limited personal risk.D)All of these answers are correct.52)53)When the owner withdraws cash from the business, which of the following is true?A)Liabilities and Capital increase.B)Assets and Liabilities increase.C)Assets decrease and Withdrawals increase.D)None of the above are correct.53)54)This statement shows the financial position of a business on a particular date.A)Income StatementB)Accounting EquationC)Balance SheetD)Expanded Accounting Equation54)55)If total liabilities increased by $20,000 and the assets increased by $25,000 during the accountingperiod, what is the change in the owner's equity amount?A)Decrease of $5,000B)Decrease of $20,000C)Increase of $25,000D)Increase of $5,00055)56)Which of the following would result if the business purchased supplies on credit?A)Supplies would increase and Capital would increase.B)The purchase of supplies is not a business transaction.C)Supplies would increase and Cash would decrease.D)Supplies would increase and Accounts Payable would increase.56)57)Tori's Shop collects $250 of its accounts receivable. The expanded accounting equation impact isA)Cash and Revenue increase $250.B)Cash and Capital increase $250.C)Accounts Receivable decreases and Capital increases $250.D)Cash increases and Accounts Receivable decreases $250.57)58)Which of the following professional accounting designations has been replaced by "CPA"?A)CAB)CGAC)CMAD)All of the above58)59)The advantages of a corporation do NOT includeA)limited personal risk.B)business decisions made by career administrators.C)easy to set up.D)can continue indefinitely.59)660)Owner's withdrawalsA)increase liabilities.B)decrease assets.C)decrease withdrawals.D)increase expenses.60)61)If total liabilities are $3,000 and total assets are $10,000, owner's equity must beA)$7,000.B)$13,000.C)$3,000.D)$10,000.61)62)The increase or decrease in the owner's equity is reported on theA)balance sheet.B)statement of owner's equity.C)income statement.D)All of these are correct.62)63)If total liabilities increased by $16,000 and the assets increased by $20,000 during the accountingperiod, what is the change in the owner's equity amount?A)Increase of $20,000B)Decrease of $16,000C)Increase of $4,000D)Decrease of $4,00063)64)When services are rendered but payment is not made, which account would be increased?A)Accounts ReceivableB)CashC)Accounts PayableD)Withdrawal64)65)What three elements make up a balance sheet?A)Assets, liabilities, and revenuesB)Assets, liabilities, and owner's equityC)Liabilities, expenses, and owner's equityD)Debts, assets, and cash65)66)Which two financial statements show results for a period of time?A)The Statement of Owner's Equity and the Income StatementB)Only one statement shows results for a period of timeC)The Balance Sheet and the Income StatementD)The Balance Sheet and the Statement of Owner's Equity66)67)Which of the following transactions has no effect on owner's equity?A)Paying salaries expenseB)Billing for services renderedC)A withdrawalD)Equipment purchase67)68)ExpensesA)are costs the company incurs in carrying on operations.B)are a subdivision of owner's equity.C)record personal expenses not related to the business.D)Both A and B are correct.68)69)If the beginning capital was $14,000 and in a fiscal period there was revenue of $8,000,withdrawals of $3,000, and expenses of $1,500 then the ending capital would beA)$23,500.B)$20,500.C)$17,500.D)$26,500.69)70)A double line in a financial statement indicates at total and is called ________ a column.A)footing.B)tallying.C)adding.D)heading.70)771)Which of the following statements is TRUE?A)Owner's withdrawals decrease owner's equity.B)Net income causes liabilities to decrease.C)Net losses cause liabilities to increase.D)Owner's withdrawals decrease net income.71)72)Stork Machining has total assets of $40,000. What are the total assets if new equipment ispurchased for $10,000 cash?A)$60,000B)$50,000C)$55,000D)$40,00072)73)Which of the following is NOT an asset?A)TruckB)Accounts PayableC)Accounts ReceivableD)Cash73)74)Eileen's Corner Shoppe purchases a new computer for cash. This causesA)Computer Equipment to increase and Cash to decrease.B)Accounts Payable to increase and Capital to increase.C)Cash and Capital to increase.D)Computer Equipment and Cash to increase.74)75)Carrie billed her legal clients $5,000 for legal work completed during the month. This transactionwillA)cause a $5,000 increase in assets and revenues.B)cause a $5,000 increase in revenues and a decrease in liabilities.C)cause a $5,000 increase in revenues and liabilities.D)not be recorded until the cash is collected.75)76)An obligation that is payable to creditors isA)a liability.B)the owner's equity.C)an asset.D)an expense.76)77)The purpose of the accounting process is to provide financial information aboutA)sole proprietorships.B)large corporations.C)small businesses.D)All of these answers are correct.77)78)The purchase of equipment with both cash and on account was recorded as only a creditpurchase. Due to this errorA)liabilities would be overstated.B)owner's equity would be overstated.C)assets would be understated.D)None of the above are correct.78)79)Bianca's Beverages purchases $2,500 worth of office equipment on account. This causesA)Office Equipment to decrease and Accounts Payable to increase.B)Accounts Payable to increase and Capital to decrease.C)Cash and Capital to decrease.D)Office Equipment and Accounts Payable to increase.79) 880)If a company's revenues are greater than its expenses, increasing its revenues and decreasing itsexpenses willA)not affect owner's equity.B)decrease assets.C)decrease net income.D)increase net income.80)81)Accounting reports are least helpful in answering which of the following questions?A)How much cash was available at the end of the last year?B)Did the company make a profit for the previous year?C)Can the company pay its debts on time?D)How well were the employees treated by management?81)82)The net income or net loss is calculated on theA)income statement.B)balance sheet.C)statement of owner's equity.D)none of these.82)83)A revenue should be recorded whenA)payment is received.B)it is earned.C)the invoice is sent to the customer.D)None of the above are correct.83)84)Which of the following items is NOT listed on the balance sheet?A)EquipmentB)RevenueC)Accounts ReceivableD)Accounts Payable84)85)The cash purchase of a truck was recorded as a purchase on credit. This error would meanA)liabilities were overstated.B)assets were overstated.C)Answers A and B are correct.D)None of the above are correct.85)86)Which of the following items are on both the balance sheet and the statement of owner's equity?A)Additional owner's investmentsB)Net lossC)CapitalD)Owner's withdrawals86)87)The Sarbanes-Oxley Act in the United States and National Policies in Canada were passed toA)improve the accuracy of the company's financial reporting.B)replace all of the old accounting procedures with new ones.C)prevent fraud at public companies.D)Both A and C are correct.87)88)The payment of accounts payable wouldA)increase both assets and liabilities.B)decrease assets and increase liabilities.C)decrease both assets and liabilities.D)increase assets and decrease liabilities.88)89)Which of the following is NOT a type of business organization?A)Sole proprietorshipB)OperationC)CorporationD)Partnership89)90)Which of the following will be recorded in the owner's equity column as an increase?A)An investment by the ownerB)The purchase of an asset on creditC)An exchange of assetsD)A withdrawal by the owner90)991)If 'Ol Fashioned Toys' revenues are greater than its expenses during the accounting periodA)the business will earn a net income.B)liabilities will increase more than assets.C)the business will incur a loss.D)assets will increase more than liabilities.91)92)The heading of an income statement (in correct order) would includeA)who, what, whenB)who, what, whyC)who, where, when.D)why, what, where92)93)If a company's revenues are higher than its expenses, it will causeA)no effect on owner's equity.B)an increase in owner's equity.C)a decrease in owner's equity.D)an increase in assets.93)94)Which of the following would result if the owner invested cash in the business?A)Cash would increase and Capital would increase.B)Cash would decrease and Capital would increase.C)An investment by the owner is not a business transaction.D)Cash would increase and Capital would decrease.94)95)When the company buys supplies on account, which of the following is true?A)Assets and Liabilities increase.B)Assets and Capital increase.C)Liabilities and Capital increase.D)None of the above are correct.95)96)Sunrise Company has total assets of $25,000. If $2,000 cash is used to purchase a new computer,the total assets would beA)$22,000.B)$23,000.C)$25,000.D)$27,000.96)97)Which of the following would result if a business purchased Equipment paying a 50% downpayment in cash?A)Accounts Payable would increase.B)Equipment would increase and Cash would decrease.C)Since the equipment has not been paid in full, there is nothing to record.D)Both A and B are correct.97)98)Which of the following will be recorded in the owner's equity column as a decrease?A)An investment by the ownerB)A withdrawal by the ownerC)An exchange of assetsD)The purchase of an asset on credit98)99)Which of the following transactions would cause an asset to decrease and the owner's equity todecrease?A)The business bought supplies for cash.B)The owner withdrew cash from the business.C)The business bought supplies on account.D)The business provided services to a cash customer.99)100)Items owned by the business such as land, supplies and equipment areA)revenue.B)liabilities.C)owner's equity.D)assets.100)10101)Which financial statement is prepared first?A)Income StatementB)Balance SheetC)Statement of Owner's EquityD)None of the above101)102)Putting the information into the accounting system would be calledA)recording.B)classifying.C)summarizing.D)analyzing.102)103)A book store would be considered aA)merchandise company.B)service company.C)manufacturer.D)None of the above are correct.103)104)Which of the following transactions would cause an asset to increase and the owner's equity toincrease?A)The business bought supplies on account.B)The owner invested cash in the business.C)The owner withdrew cash from the business.D)The business incurred an expense on credit.104)105)Liam's Sporting Goods buys $35,000 of equipment on credit. Which of the following is a TRUEstatement?A)Total assets are unchanged.B)Total assets increase.C)Total liabilities decrease.D)Total liabilities are unchanged.105)106)The financial statement that shows business results in terms of revenue and expenses isA)the expanded accounting equation.B)an income statement.C)a statement of owner's equity.D)a balance sheet.106)107)Legal services were provided to a credit customer. How would this affect the accountingequation?A)Accounts Receivable and Revenue increase.B)Accounts Payable and Capital increase.C)Cash and Accounts Receivable increase.D)None of the above are correct.107)108)Assets and Liabilities are reported on theA)income statement.B)balance sheet.C)statement of owner's equity.D)none of these.108)109)A corporationA)is owned by shareholders.B)has limited risk to shareholders.C)can continue indefinitely.D)all of the above.109)110)If total liabilities are $48,000 and assets are $52,000, the owner's equity must beA)$4,000.B)$100,000.C)$52,000.D)$48,000.110)111)Mark paid $500 cash to partially reduce the amount owed for equipment that was previouslybought on account. This transaction wouldA)decrease both assets and liabilities.B)increase both assets and liabilities.C)increase assets and decrease liabilities.D)decrease assets and increase liabilities.111)11112)When the company provides services to a cash customer, which of the following is true?A)Assets and Revenue increase.B)Assets and Capital increase.C)Liabilities and Capital increase.D)None of the above are correct.112)113)Ryan withdrew cash from the business to pay his personal cell phone bill. The expandedaccounting equation changes includeA)decrease in both Cash and Withdrawal.B)decrease in Cash and increase in Withdrawal.C)increase in both Cash and Withdrawal.D)increase in Cash and decrease in Withdrawal.113)SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.For each of the following financial statement users, identify if they would be considered an internal or an externalstakeholder.114)Auditor hired by CRA114)115)President of the local Garden Club115)116)The parliament member running for re-election116)117)Economical Life, the company that handles our employee benefit plan117)118)Canada Revenue Agency118)119)The Chief Financial Officer119)120)The bank who lends you money120)121)Fred Jones, who purchased shares in our corporation121)122)Day Shift Receptionist122)123)Manager of the Sales Department123)124)Your biggest customer124)125)The President and CEO125)TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.126)Creditors' claims against assets are called owner's equity.126)127)The parties that have claims against the assets of the business are called managers andcustomers.127)128)The statement of owner's equity is the link between the income statement and balance sheet.128)12129)Generally Accepted Accounting Principles are the underlying concepts that make up acceptableaccounting practices.129)130)The income statement is prepared first so the information can be used to prepare the statementof owner's equity.130)131)On the Income Statement, the total of Expenses is always shown with a dollar sign ($).131)132)If liabilities are $10,000 and assets are $15,000, owner's equity will be $5,000.132)133)Revenue and cash will always be the same amount.133)134)Revenue and expenses will always be the same amount.134)135)Supplies are assets that have a longer life than equipment.135)136)The accounting equation states that total assets must always equal owner's equity.136)137)Managerial accountants primarily provide special-purpose reports to serve the needs of externalusers.137)138)The parties that have claims against the assets of the business are called creditors and owners.138)139)Accounts Receivable results from earning revenue when cash is not yet received.139)140)Profit increases drawings.140)141)Cash is an asset that would appear on the balance sheet.141)142)If expenses are more than revenue, a net loss is incurred.142)143)The purpose of accounting is to provide decision-makers with useful, accurate information.143)144)Revenue is an asset.144)145)Credit is the same thing as Liabilities.145)146)If the assets owned by a business total $75,000, owner's equity must also total $75,000.146)147)The three elements that make up a balance sheet are assets, liabilities and expenses.147)148)The four parts of owner's equity include capital, withdrawals, revenue, and expenses.148)149)On a Balance Sheet, both the total for Assets and the total of Liabilities plus Owner's Equity areshown with a dollar sign ($).149)13150)The income statement is a financial statement showing business results in terms of revenues andexpenses.150)151)A disadvantage of a corporation is that shareholders are held personally liable for thecorporation's debts.151)152)Not-for-profit businesses are not permitted to earn any revenue.152)153)If the assets owned by a business total $50,000 and liabilities total $30,000, then owner's equitytotals $80,000.153)154)Canada has not yet adopted the IFRS rules for accounting.154)155)A transaction can occur which will affect only the assets side of the accounting equation.155)156)The accounting equation states that total assets must always equal total liabilities plus owner'sequity.156)157)The statement of owners' equity is for a particular date.157)158)The balance sheet is for a particular date.158)159)Cash is the same thing as Capital.159)160)Expenses are recorded as costs of doing business whether cash was paid or not.160)161)The owner of a business paid personal rent with a company cheque. This payment reduces Cashas well as increases the expenses of the firm.161)162)The income statement is for a particular date.162)163)In a shift of assets, the composition of the assets changes but total assets do not change.163)164)Dollar signs must be used for every number on a Balance Sheet.164)165)The left side of the accounting equation shows what is owned by the business.165)166)To distinguish the total on a financial statement, use double underlines.166)167)The basic accounting equation is: Assets = Liabilities.167)168)The income statement is the first financial statement completed.168)169)Profit decreases equity.169)170)Cash investments by the owner increases both equity and assets.170)14171)Withdrawals are considered an expense of doing business.171)172)The new accounting designation for Canada is CGA.172)173)All Canadian companies must follow the IFRS rules for accounting.173)174)The balance sheet shows the company's financial position as of a particular date.174)175)The primary objective of a not-for-profit business is to maximize revenue.175)176)Cash withdrawals by the owner decrease both equity and assets.176)177)When expenses are greater than revenue, net income is the result.177)178)Double-underlining is used for every sub-section on a Balance Sheet.178)179)A sole proprietorship ends with the death of the owner.179)180)Total assets are included in the statement of owner's equity.180)181)The ending capital figure on the statement of owner's equity will be used on the balance sheet.181)182)The time period covered in a balance sheet is for a stated year.182)183)If the liabilities owed by a business total $150,000, then the assets must also total $150,000.183)184)A Statement of owner's equity shows the change in capital.184)185)Revenues generate an inflow of assets.185)186)The parties that have claims against the assets of the business are called managers andcustomers.186)187)In a financial statement a double line indicates a total.187)188)The balance sheet is prepared first so the information can be used to prepare the statement ofowner's equity.188)189)The statement of owner's equity shows assets, liabilities and capital.189)190)The function of accounting includes analyzing, recording, classifying, summarizing, reporting,and interpreting financial information.190)191)Withdrawals are business expenses that are included on the balance sheet.191)192)The left side of the accounting equation must always equal the right side of the equation.192)15