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Accounting equation

Total questions: 23

Worksheet time: 12mins

Name
Class
Date
1.

if capital is added in the business it will (a)   the asset side

2.

Which one of the following equations correctly expresses the relationship between assets (A), liabilities (L), revenues (R), expenses (E) and capital (C)?

a)

A = L + R + E + C

b)

A = C + L + (R-E)

c)

A = C - (R - E) + L

d)

A = (L - C) + (R - E)

3.

Additional capital introduced in the business will increase..................... and .....................

a)

Liabilites and capital

b)

Land and Capital

c)

Assets and Capital

d)

Assets and Liabilities

4.

which of the following will cause owner"s equity increase ?

a)

Expense

b)

Owner Drawee

c)

Revenue

d)

Loss

5.

The liability of form h 4000 the capital of proprietor is 8000 the total assets are

a)

8000

b)

4000

c)

12000

d)

None of these

6.

If the assets of a business are Rs . 100,000 and equity is Rs. 20,000, the value of liability will be

a)

Rs 100,000

b)

Rs 80,000

c)

Rs 120,000

d)

Rs. 20,000

7.

Assets and liabilities increase when the company purchases supplies on account

a)

True

b)

False

8.

Amount withdrawn by proprietor for personal use will....... Cash and capital

a)

Increase

b)

Decrease

c)

Not change

d)

None of these

9.

Difference between Assets and Liabilities is

a)

Liabilities

b)

Cash

c)

Capital

d)

Drawings

10.

Consider the following data?

a)

Rs. 4,90,000

b)

Rs. 5,50,000

c)

Rs. 4,40,000

d)

Rs. 3,80,000

11.

Assets, liabilities and owner's equity are the components of the accounting equation.

a)

True

b)

False

12.

There is an increase in liability when you buy equipment on account.

a)

True

b)

False

13.

Goods Purchased on credit will increase the

a)

Liability

b)

Capital

c)

Debtor

d)

Drawings

14.

A decrease in asset could be explained either by a decrease in liabilities or a decrease on owner's equity.

a)

True

b)

False

15.

in accounting equation assets are equal to equities. what are equities of a firm

a)

assets

b)

liabilities

c)

liabilities+ capital

d)

none of the above

16.

What is the accounting equation?

a)

assets = liabilities + owner's equity

b)

liabilities = assets + owner's equity

c)

owner's equity = assets + liabilities

d)

assets = revenue - expenses

17.
The company purchases land by paying half in cash and signing a note payable for the other half..What is the effect on accounting equation?
a)
Inc. in Assets (Land), Dec.In Assets (Cash)  I  Inc. in Liability (NP)
b)
Inc. in Assets (Land), Dec.In Assets (Cash)  I  Inc. in Liability (NP)
c)
Inc. in Assets (Land)  I  Inc. in Liability (NP)
18.

Goods purchased on credit will lead to...... in stock and creditors

a)

Increase

b)

Decrease

c)

None of these

19.

is furniture is purchased on credit, it will (a)   liability.

20.

The accounting equation should remain in balance because every transaction affects how many accounts?

a)

Only one

b)

Only two

c)

Two or more

d)

All of given option

21.

An accounting equation is based on ......... principle

a)

Revenue recognition

b)

Verifiable objective

c)

Money measurement

d)

Dual

22.

Calma partially paid Php15,000.00 for the purchase of computer supplies on account. What is its effect on the accounting equation?

a)

Increase in liabilities = Decrease in Owner's equity

b)

Decrease in Assets = Decrease in Liabilities

c)

Increase in one Asset = Decrease in another Asset

d)

Increase in Asset = Increase in Liabilities

23.

If there is a PhP 500,000-worth of assets and PhP 200,000 worth of liabilities, then there is PhP 300,000 worth of owner's equity.

a)

True

b)

False