Question

1. Owner invested personal funds into her business. The two accounts that would be affected are _______and _______ . Both accounts would be increased.

2. The business paid salary to workers for the week. The word paid tells us that    [ Select ] ["Cash", "Accounts Receivable", "Capital", "Accounts payable"] would [ Select ] ["Increase", "Decrease"] . The fact that the employees worked and we paid them tell us that the benefit of their work has been "used" up. This means that [ Select ] ["Cash", "Accounts Receivable", "Capital", "Salary Expense", "Miscellaneous Expense"] will    [ Select ] ["Increase", "Decrease"] , which, as the video explains decreases owner's equity.

3. Think about which financial statement each of the following accounts belong:

assets, liabilities, Capital (owner's equity), drawing, revenues, expenses

True or false: Each account above only appears on ONE financial statement.

True

False

Answer 1

1. Owner invested personal funds into her business. The two accounts that would be affected are CASH and OWNER’s CAPITAL. Both accounts would be increased.
   Cash is increased as Cash is being received by the business.

2.   The business paid salary to workers for the week. The word paid tells us that CASH would DECREASE . The fact that the employees worked and we paid them tell us that the benefit of their work has been "used" up. This means that Salary Expense will INCREASE , which, as the video explains decreases owner's equity.

3. Think about which financial statement each of the following accounts belong:
Assets = Balance Sheet,
liabilities = Balance Sheet,
Capital (owner's equity) = Balance Sheet and Statement of Owner’s equity,
drawing = Statement of Owner’s Equity,
revenues =Income Statement,
expenses = Income Statement

4. FALSE. Capital balance appears on BOTH Statement of Owner’s equity and Balance Sheet.