Accounting QB Difficult

Land, originally purchased for $20,000, is sold for $75,000 in cash. What is the effect of the sale on the accounting equation?

• a. assets increase $75,000; stockholders' equity increases $75,000

• b. assets increase $55,000; stockholders' equity increases $55,000

• c. assets increase $75,000; liabilities decrease $20,000; stockholders' equity increases $55,000

• d. assets increase $20,000; no change for liabilities; stockholders' equity increases $75,000

Determine the beginning capital account balance for Nana Enterprise. It reported the following information: Assets P38,000, Liabilities P15,000, Capital P32,500, withdrawals P5,000, Revenue 15,000, Expenses P8,000. During the period Nana invested an additional P10,000 in the business.

• a. P30,500

• a. P40,500

• a. P20,500

• a. P34,500

The Kennedy Company sold land for $60,000 in cash. The land was originally purchased for $40,000, and at the time of the sale, $15,000 was still owed to First National Bank on that purchase. After the sale, The Kennedy Company paid off the loan to First National Bank. What is the effect of the sale and the payoff of the loan on the accounting equation?

• a. assets increase $20,000; liabilities decrease $15,000; stockholders' equity increases $5,000

• b. assets increase $5,000; liabilities decrease $15,000; stockholders' equity increases $20,000

• c. assets increase $60,000; liabilities decrease $15,000; stockholders' equity increases $20,000

• d. assets increase $20,000; liabilities decrease $15,000; stockholders' equity increases

Rivers Computer Makeover Company purchased $15,000 of Computer and Office Equipment. The company paid $3,000 in cash at the time of the purchase and signed a promissory note for the remainder to be paid in six monthly installments. How will this transaction affect the accounting equation?

• a. Increase Assets (Computer and Office Equipment $15,000) and decrease Liabilities (Accounts Payable $15,000)

• b. Increase Total Assets by a net amount of $12,000 (increase Computer and Office Equipment $15,000 and decrease Cash $3,000) and increase Liabilities (Notes Payable $12,000)

• c. Increase Total Assets by a net amount of $15,000 (increase Computer and Office Equipment $12,000 and increase Cash $3,000) and decrease Liabilities (Accounts Payable $15,000)

• d. Increase Assets (Computer and Office Equipment $12,000) and increase Liabilities (Accounts Payable $12,000)

Marwana is the owner and operator of B’squad Company. As of the end of its accounting period, December 31, 2018, B’squad Company has assets of P925,000 and liabilities of P285,000. During 2019, Marwana invested an additional P50,000 in business and withdrew in the amount of P30,000 from the business. What is the amount of profit during 2019, assuming that as of December 31, 2019, assets were P980,000 and liablities were P255,000?

• a. P95,000

• b. P65,000

• c. P165,000

• d. P725,000

Supplies has a P60,000 unadjusted balance on your trial balance. At year-end you count supplies of P20,000. What adjustment will appear on your worksheet?

• a. Dr. Supplies 40,000; Cr. Supplies Expense 40,000

• b. Dr. Supplies Expense 20,000; Cr. Supplies

• c. Dr. Supplies Expense 40,000; Supplies 40,000

• d. No adjustment is needed because the Supplies account already has a correct balance.

Salaries Payable were P3,500 at the end of September and P2,800 at the end of October. Salaries Expense for October was P18,000. How much cash was paid for salaries during October?

• a.P18,700

• b.P24,100

• c.P17,300

• d.P11,700

Gonzales Rebeca Animal Breeders bought equipment on June 26, 2019 for P100,000. At the time of purchase, the equipment was estimated to have useful life of nine years and a trade-in value of P10,000 at the end of nine years. Using the straight line method, the amount of accumulated depreciation for December 31, 2019 is:

• a. P11,111

• b. P5,000

• c. P10,000

• d. P5,556

I. The adjusting entry to allocate part of the cost of a one-year fire insurance policy to expense will cause total assets to increase.

II. A company’s fiscal year must correspond to the calendar year.

III. The amount of accrues revenues is recorded by debiting an asset account and crediting an income account.

Which of the following statement is false?

• a. I, II, III

• b. I, III

• c. II, III

• d. All statements are correct

An adjusting entry to accrue salaries incurred but not yet paid is an example of

• a. reflecting unrecorded revenues earned during the accounting period.

• b. reflecting unrecorded expenses incurred during the accounting period.

• c. aligning recorded cost with appropriate accounting periods.

• d. aligning recorded revenues with appropriate accounting periods.