Basic Accounting

Which of the following items has no effect on owner’s equity?

• Expense

• Owner’s Withdrawal

• Purchase of land

• Revenue

The asset created by a business when it makes a sale on account is termed__________

• Accounts payable

• Accounts receivable

• Prepaid Expense

• Unearned Revenue

Equipment with an estimated market value of P60 000is offered for sale at P90 000. The equipment is acquired for P30 000 in cash and a note payable of P50 000 due in 30 days. The amount used in buyer’s accounting records to record acquisition is __________

• P 80 000

• P 60 000

• P 90 000

• P30 000

On January 1, 2016, Potter Company bought a building for P2,750,000 to serve as the Company’s office. It was estimated that the said building will be useful for 20 years. After the end of its useful life, the building can still be sold for P250,000. What is the amount of depreciation expense that should be recognized by Potter Company on December 31, 2016?

• P 100,000

• P 125,000

• P 150, 000

• P 175, 000

The unearned rent account has a balance of P 36,000. If P 4,000 of the P 36,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

• P 4,000

• P 40,000

• P 32,000

• P 36,000

Lakers Company received P12,000 from a tenant on December 1 for four months' rent of an

office. This rent was for December, January, February, and March. If Lakers debited Cash

and credited Unearned Rental Income for P12,000 on December 1, the necessary

adjustment December 31 would include

• A debit to Rental Income of P3,000

• A credit to Rental Income of P3,000

• A debit to Unearned Rental Income of P9,000

• A credit to Unearned Rental Income of P9,000

At September 1, 2008, Foli Co. reported owner’s equity of $136,000. During the month,

Foli generated revenues of $20,000, incurred expenses of $12,000, purchased equipment

for $5,000 and withdrew cash of $2,000. What is the amount of owner’s equity at

September 30, 2008?

• $136,000

• $8,000

• $137,000

• $142,000

Meenen Company purchases equipment for $1,200 and supplies for $400 from Sanders

Co. for $1,600 cash. The entry for this transaction will include a

• debit to Equipment $1,200 and a debit to Supplies Expense $400 for Sanders.

• credit to Cash for Sanders.

• credit to Accounts Payable for Meenen

• debit to Equipment $1,200 and a debit to Supplies $400 for Meenen.

Purchased 36-month insurance policy for cash will

• Net effect is no change: Increases assets and decreases assets.

• Increases assets and increases liabilities

• Increases liabilities and decreases stockholders’ equity

• Decreases assets and decreases liabilities

Received utility bill to be paid at later date

• Net effect is no change: Increases assets and decreases assets.

• Increases assets and increases liabilities

• Increases liabilities and decreases stockholders’ equity

• Decreases assets and decreases liabilities