Scenario-Based MCQs on Accounting

The business purchases machinery worth $30,000 on credit. The amount owed is classified as:

• Asset

• Liability

• Capital

The company receives $10,000 in cash from an investor. This is recorded as:

• Asset

• Liability

• Capital

A customer owes $7,500 for services provided on credit. This amount is recorded as:

• Asset

• Liability

• Capital

The business pays off $5,000 of its outstanding loan. This reduces:

• Asset

• Liability

• Capital

Office furniture is purchased for $2,500 and paid in cash. This purchase is classified as:

• Asset

• Liability

• Capital

Salaries of $8,000 are unpaid at the end of the month. This unpaid amount is recorded as:

• Asset

• Liability

• Capital

The owner contributes personal savings of $20,000 to the business. This is classified as:

• Asset

• Liability

• Capital

The business receives $2,000 in advance for a service to be provided next month. The advance is recorded as:

• Asset

• Liability

• Capital

The company rents a building for $12,000 per year, paying the first six months in advance. The payment is classified as:

• Asset

• Liability

• Capital

Equipment worth $25,000 is fully paid for using the business’s bank account. The equipment is recorded as:

• Asset

• Liability

• Capital