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Financial Accounting: Information for Decisions10th EditionJohn J. Wild 889 solutions The accounting equation can be expressed as Assets – Liabilities = Owner's Equity.a.Trueb.FalseANSWER:True The rights or claims to the assets of a business may be subdivided into rights of creditors and rightsof owners. The owner’s rights to the assets rank ahead of the creditors' rights to the assets. If the liabilities owed by a business total $300,000 and owner's equity is equal to $300,000, then theassets also total$300,000. a.Trueb.FalseANSWER:FalseIf total assets increased by $190,000 during a specific period and liabilities decreased by $10,000during the sameperiod, the period's change in total owner's equity was a $200,000 increase.a.Trueb.FalseANSWER:True If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the ownerinvested$10,000 in cash, the capital of the owner increased by $40,000. An account receivable is typically classified as revenue. An account receivable is a claim against a customer resulting from a sale on account. Paying an account payable increases liabilities and decreases assets.a.True b.FalseANSWER:FalseReceiving payments on an account receivable increases both equity and assets. Cash withdrawals by owners decrease assets and increase equity. Purchasing supplies on account increases liabilities and decreases equity. Receiving a bill or otherwise being notified that an amount is owed is notrecorded until the amountis paid.a.Trueb.FalseANSWER:False Revenue is earned only when money is received. Assets that are used up during the process of earning revenue are called expenses. The excess of revenue over the expenses incurred in earning the revenue is called capital. The primary financial statements of a proprietorship are the income statement, statement of owner'sequity, and thebalance sheet.a.Trueb.FalseANSWER:False An income statement is a summary of the revenues and expenses of a business as of a specific date. A statement of owner's equity reports the changes in the owner's equity for a period of time. The statement of cash flows consists of three sections: cash flows from operating activities, cashflows fromincome activities, and cash flows from equity activities. The balance sheet represents the accounting equation. What is the accounting equation expressed as?Also known as the balance sheet equation, the accounting equation formula is Assets = Liabilities + Equity. This equation should be supported by the information on a company's balance sheet.
What is the accounting equation assets liabilities Owner's Equity?The main accounting equation is: Assets = Liabilities + Equity. Together, they make up a company's balance sheet. The concept behind it is that everything the business has came from somewhere — either a third party, such as a lender, or an owner, such as a stockholder.
What are the 3 accounting equation?The accounting equation can be rearranged into three different ways: Assets = Liabilities + Owner's Capital - Owner's Drawings + Revenues - Expenses. Owner's equity = Assets - Liabilities. Net Worth = Assets - Liabilities.
How is the accounting equation expressed quizlet?The accounting equation may be expressed as assets - liabilities = owner's equity. According to the business entity concept, a proprietor may include nonbusiness assets and liabilities in the business entity's accounting records. Expenses represent a decrease in liabilities.
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