learning objective 1 3 1 liabilities represent creditors 39 claims on the business 3 4310036

Learning Objective 1-3

1) Liabilities represent creditors' claims on the business's assets.

2) The left side of the accounting equation measures the amount that the business owes to creditors and to the owner.

3) The total of amount of assets that a business possesses, may or may not equal the total of liabilities and equity of the business.

4) Equity increases when revenues are earned.

5) Equity decreases with expenses and revenues.

6) Owner's withdrawals are the expenses of a business.

7) A debt that a business owes to an outside party is called:

A) an asset.

B) a liability.

C) stockholders' equity.

D) revenue.

8) Viva Inc. produces and sells coffee beans. This month it earned $500 by selling coffee beans to Jeffery Inc. The $500 received by Viva is its:

A) revenue.

B) equity.

C) gain.

D) debt.

9) The owner's claim to the assets of the business is called:

A) return on assets.

B) expenses.

C) equity.

D) debt.

10) The economic resources of a business such as furniture, building, and land are its:

A) liabilities.

B) revenues.

C) assets.

D) withdrawals.