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WorksheetsL1-Accounting equation
Total questions: 10
Worksheet time: 8mins
Which of the following statements is false?
Liabilities are economic obligations to outsiders
Assets are economic resources that are expected to benefit future periods
Expenses are decreases in owner’s equity that result from delivering goods and services to customers
Revenues are assets because they represent economic benefits.
Which of the following transactions would NOT affect owner’s equity?
Service provided on account
Investment of cash by the owner
Cash purchase of supplies
Payment of salaries
If assets decrease $8,000 during the period and liabilities decrease $40,000 during the period, owner’s equity must have:
Decreased $32,000.
Decreased $48,000
Increased $32,000
Increased $48,000
Level 2 of the hierarchy of financial-statement concepts, which describes the qualitative characteristics of accounting information, includes:
A. Relevance and reliability
B. Revenue and expenses
C. Comparability and understandability
D. Both A and C
Purchasing office furniture on account
A. increases assets.
B. has no effect on liabilities.
C. increases owner’s equity.
D. all of the above.
The amount of net income shown on the income statement also appears on the
A. Balance sheet.
B. Statement of owner’s equity.
C. Statement of financial position.
D. Cash flow statement.
A balance sheet reports:
A. The assets, liabilities, and owner’s equity on a particular date.
B. The difference between revenues and expenses during the period.
C. The change in the owner’s equity during the period.
D. The cash receipts and cash payments during the period.
The amount owed by an entity when it makes a purchase on account is termed a(n):
A) accounts receivable.
B) accounts payable.
C) note receivable.
D) note payable.
The payment of rent each month for office space would:
A) increase total assets.
B) increase owner's equity.
C) decrease liabilities.
D) increase expenses.
Purchasing a building for $150,000 by paying cash of $30,000 and obtaining a mortgage for $120,000 would:
A) increase assets and liabilities by $150,000.
B) increase liabilities by $120,000.
C) increase liabilities by $30,000.
D) decrease assets and liabilities by $120,000.
