Indicate whether the statement is True or False by writing T or F in front of each number Each correct answer is worth 1 point The purpose of accounting is to provide financial information about a business to Individuals and organization. Since financial information is communicated in accounting is said to be the "language to business." Generally accepted accounting principles are procedure and guidelines to be followed in the accounting and reporting process. The accounting equation shows the relationship among the three basic accounting elements-assets, revenues, and owners equity. An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered. When supplies are purchased to last for several months, they are recorded as assets when they are purchased. An increase in a revenue account may also result in an increase in the accounts receivable accounts. Financial statements commonly prepared by business include an income statement, a retained earning statement and a balance sheet. The balance sheet reports assets, liabilities, and owner's equity on a specific date. The income statement provides information covering a specified period of time. To debit an account is to enter an amount on the left side of the account. Asset accounts normally have debit balances. Prepaid Insurance is an expense account. At least two accounts are affected by every business transaction. Prepaid insurance and supplies are assets because they will provide benefits for more than one month. An account in the chart of accounts is assigned a number at random. Source documents provide objective, verifiable evidence of business transactions. A complete set of all the accounts used by a business is known as the Chart of Accounts