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1.	The basic accounting equation is Assets = Liabilities + __________  _______.

For each of the transactions in items 2 through 13, indicate the two (or more) effects on the accounting equation of the business or company.

2.	The owner invests personal cash in the business.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

3.	The owner withdraws business assets for personal use.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

4.	The company receives cash from a bank loan.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

5.	The company repays the bank that had lent money to the company.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

6.	The company purchases equipment with its cash.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

7.	The owner contributes her personal truck to the business.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

8.	The company purchases a significant amount of supplies on credit.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

9.	The company purchases land by paying half in cash and signing a note payable for the other half.
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

Information for Items 10 through 13:
Company X provides consulting services to Client Q in May. Company X bills Client Q in May for the agreed upon amount of $5,000. The sales invoice shows that the amount will be due in June.

10.	In May, Company X records the transaction by a debit to Accounts Receivable for $5,000 and a credit to Service Revenues for $5,000. What is the effect of this entry upon the accounting equation for Company X?
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

11.	In June, Company X receives the $5,000. What is the effect on the accounting equation and which accounts are affected at Company X?
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

12.	What is the effect on Client Q's accounting equation in May when Client Q records the transaction as a debit to Consultant Expense for $5,000 and a credit to Accounts Payable for $5,000?
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

13.	What is the effect on Client Q's accounting equation in June when Client Q remits the $5,000? Also, which accounts will be involved?
	Assets:	Increase	Decrease	No Effect
	Liabilities:	Increase	Decrease	No Effect
	Owner's (or Stockholders') Equity:	Increase	Decrease	No Effect

14.	Which of the following will cause owner's equity to increase?
expenses              owner draws              revenues

15.	Which of the following will cause owner's equity to decrease?
net income              net loss              revenues

16.	The accounting equation should remain in balance because every transaction affects how many accounts?
only one              only two              two or more

17.	A corporation's net income is eventually recorded in the following stockholders' equity account: ___________ ___________.

18.	A corporation's quarterly _______________ will cause a reduction in the corporation's retained earnings, which in turn reduces the corporation's stockholders' equity. However, this will not reduce the corporation's net income.

19.	The financial statement with a structure that is similar to the accounting equation is the _____________  _____________.

20.	The financial statement that reports the portion of change in owner's equity resulting from revenues and expenses during a specified time interval is the ____________  _______________.