1) Which of the following accounts is a liability? a) Prepaid Insurance b) Revenue c) Accounts Payable d) Owner's Equity 2) Which statement is correct? a) Accounts receivable is money that you owe  b) Accounts Payable is money that is owed to you c) Accounts payable is an asset d) Accounts receivable is money that is owed to you 3) Anytime you see the phrase "due in _____ days" or "on account", which is true? a) Money has already been paid b) Money has not been paid yet 4) Anytime you make a sale or provide a service, your ___________ is increased, regardless of when you are paid. a) Cash b) Revenue c) Accounts Receivable d) Expenses 5) The ongoing costs associated with owning a business are called ___________. a) Expenses b) Equities c) Revenue d) Prepaid insurance 6) Prepaid Insurance is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 7) Accounts Payable is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 8) A(n) ___________ is when the owner takes assets away from the business for personal use? a) Accounts Receivable b) Cash c) Withdrawals d) Expenses 9) If your business sells $300 worth of goods, which two accounts are affected? a) Cash and Revenue b) Cash and Accounts Receivable c) Revenue and Accounts Receivable 10) If your business provides a service on account for $150, which two accounts are affected? a) Accounts Receivable and Cash b) Revenue and Cash c) Accounts Payable and Revenue d) Accounts Receivable and Revenue 11) If you make a sale or provide service on account, do you owe them money, or do the customer owe you money? a) You owe them b) They owe you 12) If you buy $100 worth of supplies on account, which two accounts are affected? a) Supplies and revenue b) Supplies and Accounts Payable c) Supplies and Accounts Receivable d) Supplies and cash 13) If your business owes someone else money and then you make a payment on the amount you owe, what has happened? a) The amount you owe increased b) The amount you owe decreased 14) The normal balance side refers to the side that _____________. a) Increases b) Decreases 15) When labeling T-Accounts, __________ are always on the left side of the T-Table, and _______ are always on the right side. a) Credits, Debits b) Debits, Credits 16) True or False: Expenses and Withdrawals have normal debit balances because they decrease your owner's equity a) True b) False 17) The formula for Profit is total revenue minus ______________ a) Total Sales b) Total Accounts Receivable c) Total Equity d) Total Expenses

Accounting Chapter 2 Review

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