Expense is a decrease in owner's equity resulting from the operation of a business. Is it true or false? Explain why
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Expense is a decrease in owner's equity resulting from the operation of a business. Is it true or false? Explain why
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- When an owner withdraws cash or goods from the business, why is this considered an increase to the Drawing account and not an increase to the Wages Expense account?Describe a business transaction that will do the following: a. Increase an asset and increase a liability b. Decrease an asset and decrease a liability c. Decrease an asset and increase an expense d. Increase an asset and increase owners equity e. Increase an asset and decrease an asset f. Increase an asset and increase revenueWhat is the effect on the fundamental accounting equation if supplies are purchased on account? How will the fundamental accounting equation change if supplies are purchased with cash? Explain how this purchase will or will not change the owners equity.
- Give an example of business transactions that would: Cause one asset to increase and another asset to decrease, with no effect on either liabilities or owners equity. Cause both total assets and liabilities to increase with no effect on owners'Give an example of business transactions that would:a. Cause one asset to increase and another asset to decrease,with no effect on either liabilities or owners’ equity.b. Cause both total assets and liabilities to increase with noeffect on owners’ equity.Revenue will be recognized when the following occurs as a result of a business activity with a customer: a) There is an increase in assetsb) There is an increase in liabilities c) There is a decrease in assetsd) none of these
- We can say that the business is in profit, when: Select one: a. Income exceeds Liabilities b. Assets exceed Expenses c. Income exceeds Liabilities d. Income exceeds ExpensesIn which of the following cases will the business have Net profit ? a. Expenses are less than revenue b. Expenses are greater than income c. Expenses are equal to income d. Liabilities are greater than incomeWhich statement is false? * Revenues and expenses result from regular activities of the business. Gains and losses result from incidental transactions of the business. Generally, revenue is recognized when the earning process is complete and a valid promise of payment has been received. An expense is recognized immediately in the income statement when an expenditure produces no future economic benefits
- Given the revenues and expenses of a business, net loss will result if: a. All the above situations will result in net loss. b. Total revenue exceed the total expense c. Total expenses exceed the total revenue d. Total expenses equal to total revenueRevenue? (a) Is a decrease in shareholders’ equity (b) Is cost of business (c) Has no impact on shareholders’ equity (d) Is an increase in shareholders’ equity?A business returns damaged goods which it had previously purchased on credit to the supplier. The effect of this transaction would be to: Decrease capital and decrease assets Decrease assets and decrease liabilities Increase capital and decrease assets Increase assets and increase liabilities