Activity 3 Accounting Equation

Which of the following is accounting equation?

• Assets = Liabilities + Owner's Equity
• Assets = Liabilities - Owner's Equity
• Assets + Liabilities = Owner's Equity
• Assets - Liabilities = Owner's Equity

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accounting equation

Excess of assets over liabilities is known as ____________ .

• Capital

• Loss

• Profit

• Surplus

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accounting equation

Select the most appropriate alternative from those given below:

Capital is excess of assets over _________.

• Goodwill

• Liabilities

• Investments

• Withdrawals

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accounting equation

If the owner withdraws cash from the business for personal use, what is its effect on Liabilities?

• Liabilities increase
• Liabilities decrease
• No effect on Liabilities

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accounting equation

If ABC Company purchases equipment with its cash, what will happen to its assets?

• The assets of ABC Company will decrease
• The assets of ABC Company will increase
• The assets of ABC Company will remain the same

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accounting equation

XYZ company purchases land by paying half in cash and signing a note payable for the other half.

• The company's assets and liabilities both decrease

• The company's assets decrease and liabilities increase

• The company's assets increase and liabilities decrease

• The company's assets and liabilities both increase

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accounting equation

Match the following accounts to the type of accounts.

• Assets

• Notes Payable

• Liabilities

• Loans Payable

• Equity

• Laptop Computer

• Liabilities

• Inventories

• Assets

• Withdrawals

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accounting equation

The owner of BB Company contributes their personal truck to the business.

• The truck becomes a liability for the company
• The truck becomes an asset for the company
• The truck becomes a revenue for the company
• The truck becomes an expense for the company

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accounting equation

The accounting equation can be expressed as Assets - Liabilities = Owners Equity.

• True

• False

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accounting equation

If the liabilities owed by a business total P500,000, then the assets also total P500,000.

• True

• False