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WorksheetsLO3 - ACCOUNTING EQUATION
Total questions: 20
Worksheet time: 18mins
A business purchases land by paying half in cash and signing a note payable for the balance. What is the effect on accounting equation?
Increase in Assets (Land), Decrease in Assets (Cash), Increase in Liability (Notes Payable)
Increase in Assets (Land), Increase in Assets (Cash), Increase in Liability (Notes Payable)
Increase in Assets (Land), Decrease in Assets (Cash), Increase in Liability (Accounts Payable)
Increase in Assets (Land), Increase in Liability (Notes Payable)
In what accounting element can we classify INVENTORIES?
Assets
Equity
Liabilities
Revenue
If the total liabilities is ₱15,000 and the total assets is ₱23,000, what is the total equity using the accounting equation?
₱48,000
₱8,000
₱8,800
₱800
Mr. Cruz, the owner of the Isaw Shop, invests personal cash in the business. What is the effect on accounting equation?
Increase in Assets, Increase in Equity
Decrease in Assets, Increase in Equity
Increase in Liabilities, Increase in Assets
Decrease in Assets, Decrease in Equity
What is the effect on an accounting equation if a business repays the bank that had lent money to the business?
Decrease in Assets, Decrease in Liabilities, No effect in Equity
Increase in Assets, Increase in Liabilities, No effect in Equity
Increase in Assets, Decrease in Liabilities, No effect in Equity
Decrease in Assets, Increase in Liabilities, No effect in Equity
In what accounting element we can classify UNEARNED INCOME?
Assets
Liabilities
Equity
Income
Which of the following statement best defines an asset?
Assets are resources owned by the business that are expected to generate future benefits.
Assets are resources belonging to the owner that are expected to generate future benefits.
Assets are debts owed by customers that are expected to generate future benefits.
Assets are representation of residual rights or interest of the owner.
This is referred to as a decrease in net income that is outside the normal operations of the business. It denotes no benefit to the entity.
Loss
Gains
Expenses
Drawings
This refers to the physical site owned by the business where building is situated.
Land
Assets
Building
Machineries
In what accounting element can we classify PREPAYMENTS?
Assets
Liabilities
Equity
Gains
Which one is NOT a LIABILITY
Accrued Expense
Unearned Income
Prepayments
Bank Loan
Which one best represents EQUITY?
EQUITY = ASSETS - LIABILITIES
EQUITY = CAPITAL + ASSETS
EQUITY = CAPITAL - DRAWING
EQUITY = LIABILITIES - ASSETS
If Assets are ₱19,500 and Capital is ₱14,300, how much are Liabilities?
₱5,200
₱33,800
₱19,500
₱14,200
Which of the following will cause owner's equity to increase?
Personal Drawings
Utilities Expense
Salaries and Wages
Sales
Which of the following will cause owner's equity to decrease?
Service Income
Gains from sale of Property
Professional Fees
Supplies Expense
In June, the business received cash from service provided to the customer. What is the effect on the Asset account of the business?
Increases - Cash
Increases - Accounts Receivable
Decreases - Cash
Decreases - Accounts Receivable
The business paid half of the account to the supplier. What is the effect on the Liability account of the business?
No effect
Increases - Accounts Payable
Decreases - Accounts Payable
Decreases - Notes Payable
Compute for the total assets of the business:
Account Receivable - ₱10,000
Prepayments - 5,500
Furniture & Fixtures - 65,000
Accounts Payable - 2,000
Cash - 100,000
Interest Payable - 1,000
Supplies Expense - 2,000
Utilities Expense - 10,000
Unearned Income - 7,000
₱175,000
₱180,500
₱182,500
₱165,000
Compute for the total liabilities of the business:
Account Receivable - ₱10,000
Prepayments - 5,500
Furniture & Fixtures - 65,000
Accounts Payable - 2,000
Cash - 100,000
Interest Payable - 1,000
Supplies Expense - 2,000
Utilities Expense - 10,000
Unearned Income - 7,000
₱10,000
₱15,500
₱3,000
₱9,000
Compute for the Non-Current Assets of the business:
Account Receivable - ₱10,000 (due for the month)
Prepayments - 5,500 (good for 1 year)
Furniture & Fixtures - 65,000
Accounts Payable - 2,000 (payable for 6 months)
Cash - 100,000
Interest Payable - 1,000 (15 days to pay)
Supplies Expense - 2,000
Utilities Expense - 10,000
Unearned Income - 7,000
₱65,000
₱75,000
₱175,000
₱85,500
