ACC101_Chapter 1

If assets are $199,000 and liabilities are $132,000, then equity equals

• $32,000

• $67,000

• $99,000

• $131,000

If after a month the assets of a business increased $89,000 and its liabilities increased $67,000, equity must have

• a. Increased $22,000.

• b. Decreased $22,000.

• c. Increased $89,000.

• d. Decreased $156,000.

• e. Increased $156,000.

Liability created after purchasing supplies on credit are:

• a. Accounts receivable.

• b. Accounts payable.

• c. Liability

• d. Supplies

The Company purchased supplies using $1,000 cash. How does this transaction affect the accounting equation?

• a. Assets +1,000; Liabilities +1,000; Equity unchanged

• b. Assets -1,000; Liabilities unchanged; Equity -1000 (expense)

• c. Assets unchanged (+1,000 & -1000); Liabilities unchanged; Equity -1000 (expense)

• d. Assets unchanged (+1,000 & -1000); Liabilities unchanged; Equity unchanged

Lead Company completed services for a client for $15,000 on credit. How does this transaction affect the accounting equation?

• a. +$15,000 cash, +$15,000 revenue.

• b. +$15,000 accounts receivable, +$15,000 accounts payable.

• c. +$15,000 accounts receivable, +$15,000 cash.

• d. +$15,000 accounts receivable, +$15,000 revenue.

Provide descriptions for this transaction:

Increase Equipment $4,000 and Increase Accounts payable $4,000

• a. Owner invested Equipment of $4,000 in business

• b. Purchased equipment of $4,000 on credit

• c. Purchased equipment of $4,000 on cash

• d. Paid expense $4,000 using cash

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

• a. Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.

• b. Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect.

• c. Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.

• d. Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.

Items used in business operations, such as office pens and paper are several samples of:

• a. Office expense

• b. Office supplies

• c. Office equipment

• d. Office pens and papers

The difference between a company's assets and its liabilities is:

• a. Net income

• b. Expense

• c. Net asset

• d. Capital

• e. Revenue

Resources owned by a company that are expected to yield future benefits:

• a. Revenue

• b. Capital

• c. Liabilities

• d. Assets