1. If an equipment costing P93,000 is bought by paying P30,000 as a downpayment and the remaining P63,000 in 30 days, the owner's equity or capital is increased by P93,000. True False 2. A transaction with more than one debit and/or more than one credit is called compound entry. True False 3. Withdrawals of assets from a business by the owners are considered to be expenses. True False

1. If an equipment costing P93,000 is bought by paying P30,000 as a downpayment and the remaining P63,000 in 30 days, the owner's equity or capital is increased by P93,000. True False 2. A transaction with more than one debit and/or more than one credit is called compound entry. True False 3. Withdrawals of assets from a business by the owners are considered to be expenses. True False

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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expenses. 3. Accounts often need to be adjusted because a. there are never enough accounts to record all the transactions. b. many transactions affect more than one time period. c. there are always errors made in recording transactions. d. management can't decide what they want to report. 4. The most important information needed to determine if companies can pay their current obligations is the a. net income for this year. b. projected net income for next year. C. relationship between current assets and current liabilities. d. relationship between short-term and long-term liabilities. 5. The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit a. Accounts Payable. b. Purchase Returns and Allowances. C. Sales. d. Merchandise Inventory. EFocus
Splish Brothers Inc. had the following transactions. 1. Borrowed $6,385 from the bank by signing a note. Paid $3,192 cash for a computer. Purchased $575 of supplies on account. 2. 3. (a) Indicate what accounts are increased and decreased by each transaction. 1. 2. Your answer is partially correct. 3. Debit Analysis Increase the Asset Increase the Asset Increase the Asset Cash Computer Supplies Account Names Credit Analysis Increase the Liability Decrease the Asset Increase the Liability Notes Payable Cash Accounts Payable Account Names
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13. On August 1, XYZ Inc. paid $5,000 in advance for September, October, and November rent. What would be the effect on the accounting equation for the transaction? a Increase Equity and decrease equity b. Increase Assets and decrease assets Increase Liabilities decrease assets d. There is no effect on the accounting equation 14. Assume Jacob performs a service and gets paid $100 later. Under what accounting method would this transaction fall under? a. Cash Basis of Accounting b. Accrual Basis of Accounting C. Both Cash Basis and Accrual Basis of Accounting d. It would not fall under any accounting method 15. Assume Jennifer decides to perform a service and gets paid $70 cash. Under what accounting method would this transaction fall under? a. Accrual Basis of Accounting b. Cash Basis of Accounting C. Both Cash Basis of and Accrual Basis of Accounting d. It would not fall under any accounting method
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Multiple choice: 1. A business purchased equipment for ₱10,000 but deliberately reported it as ₱100,000. Which of the following principles is most likely not violated? A. Free from error B. Historical cost C. Materiality D. Faithful representation 2. These users need accounting information in order to regulate businesses that are within the scope of their legal authority. A. Auditors B. Government regulatory bodies or agencies C. Employees D. Creditors
During the most recent accounting period, a business sold inventories for £1,500 on credit that it had originally purchased for £1,000. How would this transaction affect the statement of financial position of the business? O A. Decrease inventories £1,500, increase trade receivables £1,500 B. Decrease inventories £1,500, increase trade receivables £1,500, increase equity £500 C. Decrease inventories £1,000, increase trade receivables £1,500, increase equity £500 O D. Decrease inventories £1,000, increase trade receivables £1,500, decrease equity £500
Q: The management determined that the amount due from a customer, MYTOM Limited, $50,000 is uncollectible as the company has closed down. Is it allowance for doubtful debts or bad debts?
Question 26?
When an account payable is paid with cash, the owner's equity in the business decreases. Please explain with full explanation a. True b. False