1. The financial statement that reports assets, liabilities, and owner's equity is the a) income statement b) owner's equity statement c) balance sheet d) statement of cash flow 2. Payment of an account payable affects the components of the accounting equation in the following way. a) Decreases owner's equity and decreases liabilities b) Increases assets and decreases liabilities c) Decreases assets and increases owner's equity d) Decreases assets and decreases liabilities 3. Accounts that normally have debit balances are: a) assets, expenses, and revenues. b) assets, expenses, and owner's capital c) assets, liabilities, and owner's drawings. d) assets, owner's drawings, and expenses. 4. Which of the following statements about a journal is false? a) It is not a book of original entry b) It provides a chronological record of transactions. c) It helps to locate errors because the debit and credit amounts for each entry can be readily compared d) It discloses in one place the complete effect of a transaction