True / False Questions. Please JUSTIFY FALSE statements (6 marks).

1. The accounting equation can be restated as: Assets - Equity = Liabilities. True False

2. Owner's investments are increases in equity from a company's earnings activities. True False

3. Every business transaction leaves the accounting equation in balance. True False

4. An external transaction is an exchange of value within an organization. True False

5. From an accounting perspective, an event is a happening that affects the accounting equation, but cannot be measured. True False

6. Owner's equity is increased when cash is received from customers in payment of previously recorded accounts receivable. True False

7. An owner's investment in a business always creates an asset (cash), a liability (note payable), and owner's equity (investment). True False

8. An income statement reports on investing and financing activities. True False

9. A balance sheet covers a period of time such as a month or year. True False

10. The income statement displays revenues earned and expenses incurred over a specified period of time due to earnings activities. True False

11. The statement of cash flows shows the net effect of revenues and expenses for a reporting period. True False

12. The income statement shows the financial position of a business on a specific date. True False

13. The first section of the income statement reports cash flows from operating activities. True False

14. The balance sheet is based on the accounting equation. True False

15. Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business. True False

16. Operating activities include long-term borrowing and repaying cash from lenders, and cash investments or withdrawals by the owner. True False

17. The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets. True False

18. The first step in the processing of a transaction is to analyze the transaction and source documents. True False

19. Preparation of a trial balance is the first step in the analyzing and recording process. True False

20. Source documents provide evidence of business transactions and are the basis for accounting entries. True False

21. Items such as sales tickets, bank statements, checks, and purchase orders are source documents. True False

22. An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item. True False

23. A customer's promise to pay is called an account payable to the seller. True False

24. Withdrawals by the owner are a business expense. True False