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LO3 - ACCOUNTING EQUATION

Authored by Ma. Jambalos

Business

Professional Development

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LO3 - ACCOUNTING EQUATION
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20 questions

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1.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

A business purchases land by paying half in cash and signing a note payable for the balance. What is the effect on accounting equation?

Increase in Assets (Land), Decrease in Assets (Cash), Increase in Liability (Notes Payable)

Increase in Assets (Land), Increase in Assets (Cash), Increase in Liability (Notes Payable)

Increase in Assets (Land), Decrease in Assets (Cash), Increase in Liability (Accounts Payable)

Increase in Assets (Land), Increase in Liability (Notes Payable)

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In what accounting element can we classify INVENTORIES?

Assets

Equity

Liabilities

Revenue

3.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

If the total liabilities is 15,000 and the total assets is 23,000, what is the total equity using the accounting equation?

₱48,000

₱8,000

₱8,800

₱800

4.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

Mr. Cruz, the owner of the Isaw Shop, invests personal cash in the business. What is the effect on accounting equation?

Increase in Assets, Increase in Equity

Decrease in Assets, Increase in Equity

Increase in Liabilities, Increase in Assets

Decrease in Assets, Decrease in Equity

5.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

What is the effect on an accounting equation if a business repays the bank that had lent money to the business?

Decrease in Assets, Decrease in Liabilities, No effect in Equity

Increase in Assets, Increase in Liabilities, No effect in Equity

Increase in Assets, Decrease in Liabilities, No effect in Equity

Decrease in Assets, Increase in Liabilities, No effect in Equity

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In what accounting element we can classify UNEARNED INCOME?

Assets

Liabilities

Equity

Income

7.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

Which of the following statement best defines an asset?

Assets are resources owned by the business that are expected to generate future benefits.

Assets are resources belonging to the owner that are expected to generate future benefits.

Assets are debts owed by customers that are expected to generate future benefits.

Assets are representation of residual rights or interest of the owner.

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