Test Your Knowledge 9 Test Your Knowledge 1. Describe the basic accounting equation. c. Wages due to employees that had been previously recorded as a liabil- ity now paid in cash in the amount of $50,000 How does the double entry accounting system work? d. Bills submitted to insurance com- panies in the amount of $90,000 for services rendered to patients Cash payments of $60,000 received for services previously provided and billed $5,000 worth of additional supplies 2. What is the accounting journal? 3. Create a journal entry and a T-account e. entry for each of the following transactions: a. $30,000 worth of supplies pur- f. chased with cash $10,000 worth of supplies used to pro- vide clients with goods and services purchased on account b