Accounting for Managers - Quiz

In the context of the accounting equation, if liabilities increase by Rs. 10,000 and equity decreases by Rs. 4,000, what is the most likely effect on assets?

• Assets increase by Rs. 6,000

• Assets decrease by Rs. 6,000

• Assets increase by Rs. 14,000

• Assets decrease by Rs. 14,000

If a company receives cash from a customer for services to be performed in the future, which account is initially affected?

• Revenue

• Accounts receivable

• Unearned revenue

• Retained earnings

Which user group would be most interested in the company’s profitability and growth prospects?

• Employees

• Investors

• Creditors

• Tax authorities

If a company purchases equipment on credit, what is the immediate effect on the accounting equation?

• Assets increase, liabilities increase

• Assets decrease, liabilities decrease

• Assets increase, equity decreases

• Liabilities increase, equity decreases

If a company’s owner withdraws cash for personal use, what is the effect on the accounting equation?

• Assets decrease, equity decreases

• Assets increase, equity increases

• Liabilities increase, equity decreases

• Assets decrease, liabilities increase

Closing Stock of raw materials appearing in the Trial Balance will be shown in the Final Accounts as:

• Income

• Current Asset

• Income and current Asset

• Non-Current Asset

Debtors and Creditors in the Balance Sheet are an example of

• Separate Entity Concept

• Accrual Concept

• Going Concern Concept

• Dual Aspect Concept

Which of the following is not an asset?

• Stock of stationery

• Goodwill

• Profit and loss account (credit balance)

• Accounts Receivable

• Cash at bank.

Which of the following events is/are not recorded in the books of a business?

• Significant monetary events after the balance sheet date

• Death of a chief executive of the business

• Government investigations into the pricing policies of the business

• All options

At the beginning of the current year, the owner’s equity of a firm is Rs.1,80,000. During the year, the assets and liabilities of the firm have increased by Rs.1,80,000 and Rs.2,20,000 respectively. Owner’s equity at the end of the year will be

• Rs.3,60,000

• Rs.4,00,000

• Rs.2,20,000

• Rs.1,40,000

• Rs.1,80,000