Money owed to another business is classified as equity.

Income increases assets and also liabilities.

An investment by an owner increases assets and also owner's equity.

If assets are $20,000 and owner's equity is $20,000 the business does not have any liabilities.

If assets are $100,000 and liabilities are $200,000 the business is in a troubled financial position.

Supplies is an inventory account and supplies expense is an expense account.

Paying a liability with a check has no effect on assets.

A net loss is a decrease in capital resulting from the operations of a business.

A balance sheet shows the changes in assets, liabilities, and owner's equity over a period of time.

A contingent liability is a potential liability arising from past events.

A balance sheet and income statement are reports that summarize the financial transactions of a business.

The chart of accounts is an accounting record that contains the balances of all the accounts.

A trial balance is a tool used to prove the equality of debits and credits.

Increases in assets are recorded using a credit.

Revenue and expense accounts are referred to as temporary or nominal accounts.

All businesses use the same chart of accounts.

A delivery truck is an example of a current asset.

The concept of debits and credits is based on the single entry method of bookkeeping.

Special journals are used to group and record specific types of transactions.