Quiz No. 2

Which of the following is true?

• Equity = Assets - Liabilities

• Assets = Liabilities - Equity

• Liabilities = Assets + Equity

• Equity = Assets + Liabilities

It states that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the accounting equation.

• Double-Entry Accounting System

• Bookkeeping

• Debits

• Credits

Which of the following is true?

• Total debits always equal total credits

• Debit always equates to increases in accounts.

• Credit refers to an entry on the left side of an account ledger.

• A credit will always decrease an account.

Which of the following will result in a debit entry?

• Increase in expenses

• Increase in liabilities

• Increase in capital

• Increase in income

The following will result in a credit entry, except:

• Decrease in liabilities

• Decrease in asset

• Increase in capital

• Increase in income

This is the difference between the total debits and the total credits of each account.

• Account Balance

• Debit balance

• Credit balance

• Normal balance

A business rendered service to its client and billed the customer. The customer has not yet paid the amount due. This is an example of:

• Source of Assets

• Use of Assets

• Exchange of Assets

• Exchange of Claims

A business bought equipment on account. This transaction will:

• Have no effect on equity

• Decrease asset

• Decrease liability

• Increase expenses

Which of the following is an example of an exchange of claims?

• Received bill for telephone but not yet paid.

• Paid salaries to employees.

• Paid rent in advance.

• Received bill for water and paid the same immediately.

A withdrawal of cash from business by the owner for personal use will:

• Increase equity

• Decrease asset

• Increase liability

• No effect.