CHAPTER 2 Introduction to Bookkeeping REVIEW QUESTIONS True or False 1. Cash and capital are equivalent terms that can be used interchangeably. (LO3) 2. Going concern is one of the principles of accounting. (LO2) 3. In accrual accounting, cash must be received before the transaction is recognized on the financial statement. (LOZ) 4. For every transaction reported on a financial statement, there are at least two entries. (LO5) 5. A chart of accounts is a standardized list of accounts that is only created using accounting software. (LO3) 6. Businesses are concerned only about external stakeholders in their financial reporting. (LO1) 7. Paying down a bank loan or other forms of credit will decrease equity. (LO5) 8. Purchasing or selling assets will increase equity. (LO5) 9. The normal balance of a liability is a debit. (LO3) 10. Sole proprietors and partners take money out of their business by way of a salary. (LO5) 11. The equity account for a corporation is typically identified as shareholder's equity. (LO3) Short Answer 1. What does it mean to understand the financial position of your business (or even your personal finances)? (LOT) 2. Which accounts have an impact on owner's equity? (LOS) 31 2019 Emond Montgomery Publications. All Rights Reserved