2024-10-10-Financial Management

Which of the following is true according to the accounting equation?

• Liabilities = Assets + Equity

• Assets = Liabilities + Equity

• Equity = Assets - Liabilities

• Liabilities = Equity - Assets

If a company increases its liabilities, what must happen to maintain the accounting equation?

• Assets must increase

• Equity must decrease

• Assets must decrease

• Liabilities must decrease

What happens to equity if liabilities increase but assets stay the same?

• Equity decreases

• Equity increases

• Equity remains unchanged

• Assets decrease

Which of the following scenarios breaks the accounting equation?

• Assets = R500,000; Liabilities = R300,000; Equity = R200,000

• Assets = R400,000; Liabilities = R150,000; Equity = R250,000

• Assets = R600,000; Liabilities = R350,000; Equity = R250,000

• Assets = R450,000; Liabilities = R350,000; Equity = R150,000

Which of the following is NOT classified as a current asset?

• Cash

• Accounts Receivable

• Equipment

• Inventory

Which of the following is a current liability?

• Bank Loan (due in 5 years)

• Accounts Payable

• Building

• Land

Which item is considered a non-current (long-term) asset?

• Cash

• Land

• Accounts Receivable

• Office Supplies

Which of the following would be classified as a non-current liability?

• Short-term Loan

• Mortgage Loan

• Accounts Payable

• Inventory

Equity in a business represents:

• The company’s assets

• The company’s liabilities

• The owner's claim on the company’s assets

• The company's debts

Which of the following is NOT part of shareholders' equity?

• Common Stock

• Retained Earnings

• Bank Loan

• Preferred Stock