Accounting Equation Exercises

If a company has RM50,000 in assets and RM30,000 in liabilities, what is the owner's equity?

• RM80,000

• RM30,000

• RM20,000

• RM50,000

A business purchased equipment worth RM10,000 on credit. What will be the effect on the accounting equation?

• Assets increase, Liabilities increase

• Assets increase, Owner's Equity decreases

• Liabilities increase, Owner's Equity decreases

• No effect on the accounting equation

A business owner invested RM25,000 cash into the business. What happens to the accounting equation?

• Assets increase, Liabilities increase

• Assets increase, Owner's Equity increases

• Liabilities decrease, Owner's Equity increases

• No effect on the equation

If a company's assets are RM120,000 and owner's equity is RM50,000, what is the amount of liabilities?

• RM70,000

• RM50,000

• RM120,000

• RM170,000

Which of the following transactions does not affect the accounting equation?

• Buying office supplies with cash

• Borrowing RM10,000 from a bank

• Paying RM5,000 in rent

• Hiring a new employee (without making any payment yet)

If a company pays off RM15,000 of its liabilities, what is the impact on the accounting equation?

• Assets increase, Liabilities decrease

• Assets decrease, Liabilities decrease

• Liabilities decrease, Owner's Equity decreases

• No effect on the accounting equation

A company earns RM8,000 in revenue. How does this affect the accounting equation?

• Assets increase, Liabilities increase

• Assets increase, Owner's Equity increases

• Liabilities decrease, Owner's Equity decreases

• No effect on the equation

If a business pays RM2,500 in salaries, what will be the impact?

• Assets increase, Liabilities increase

• Assets decrease, Owner's Equity decreases

• Liabilities increase, Owner's Equity increases

• No effect on the accounting equation

If a company purchases inventory on credit for RM12,000, what happens to the accounting equation?

• Assets increase, Liabilities increase

• Assets decrease, Liabilities decrease

• Liabilities increase, Owner's Equity increases

• No effect on the equation

A company receives RM5,000 in cash from a customer for services rendered. How does this affect the accounting equation?

• Assets increase, Liabilities increase

• Assets increase, Owner's Equity increases

• Liabilities decrease, Owner's Equity increases

• No effect on the equation