Part One-Iilentifying Accounting Terms

Part Tu)o-Identifying Accoltlrting Concepts anilPracticesDirectionsr Place a T for True or an I for False in the Answers column toshow whether each of the following statements is true or false-7.2.3.5.6.7.8.9.Accoundnt is the languate of business (p. 4)Keeping personal and business records seParate is an aPplication of the business entityconcept. (p. 6)Assets such as cash and supPlies have value because they can be used to acquire otherassets or be used to operate a business (p. 4The relationship amont assets. liabilities, and owner's equity can be written as anequation. (p. 4The equation is called the accornting equation and does not have to be in balance to becorrect. (p. 4The sum of the assets and liabilities of a business always equals the investment of thebusiness owner. (p. 7)Recording business costs in terms of hours required to complete projects and sales interms of dollaG is an application of the unit of measurement concePt (p. 9)The capital account is an owner's equity account. (p. 9)If two amounts are recorded on the same side of the accounting equation, the equationwill no lonter be in balance. (p. 10)'10.When a company pays insurance Premiums in advance to an insurer, it records thepayment as a liability because the insurer owes tuture coverate (P. 10)11. When items are bought and paid for later this is referred to as buyint on accounf. (p 11\12. when cash is paid on account, a liability is increased (P. 11)13, The Going Concem accountint concePt affects the way {inancial statements areprepared. (p. 13)14. Ori a balance sheet, a single line means that amounts aie to be added or subtracted. (p 14)Answers1.3.4.5.6.7-8.9.10.11.12.13.14.2 . Study Guide CENTURY 2l AccouNnNG, 7TH EDlrloN