1. The purchase of an asset on account will A) Increase total liabilities and decrease total assets. B) Have no effect on total assets or total liabilities. C) Increase total assets and increase owner’s equity. D) Increase total assets and decrease owner’s equity
____ 1. The purchase of an asset on account will
A) Increase total liabilities and decrease total assets.
B) Have no effect on total assets or total liabilities.
C) Increase total assets and increase owner’s equity.
D) Increase total assets and decrease owner’s equity.
____ 2. Amounts owed by a business are referred to as
A) Assets
B) Equities
C) Liabilities
D) Capital
E) Expenses
____ 3. When an owner deposits cash in an account in
the name of the business, it is an increase to
A) Cash and
B) Cash and Withdrawals
C) Cash and Capital
D) Cash and Accounts Payable
E) Cash and Rent Expense
____ 4. Which of the following equations is the
fundamental
A) Assets – Liabilities = Owner’s Equity
B) Assets = Liabilities + Owner’s Equity
C) Assets + Liabilities = Owner’s Equity
D) Assets – Owner’s Equity = Liabilities
E) Assets + Owner’s Equity = Liabilities
____ 5. If an owner invests her computer and printer in
the business, there is an increase to
A) Cash and Capital
B) Computer Equipment and Withdrawals
C) Cash and Withdrawals
D) Computer Equipment and Capital
E) Computer Equipment and Cash
____ 6. A collection of an account receivable will result
in which of the following?
A) No increase in total assets, total liabilities, or total
owners' equity
B) An increase in cash, only
C) A decrease in accounts receivable, only
D) Net income will increase
E) None of the above
____ 7. Which pair of accounts follows the rules of debit
and credit in the opposite manner?
A) Owner’s Withdrawals and Medical Revenues.
B) Advertising Expense and Land
C) Interest Payable and Owner’s Capital.
D) Prepaid Insurance and Owner’s Withdrawals.
____ 8. Which the following debit and credit rules are
correct?
A) Increases in owners' equity are recorded by credits.
B) Revenue is recorded by credits.
C) Decreases in owners' equity are recorded by debits.
D) Expenses are recorded by debits.
E) All of the above are correct.
____ 9. Which of the following is true about expenses?
A) Expenses may result in a decrease of assets.
B) Expenses may result in an increase in liabilities.
C) Expenses reduce owners' equity.
D) A and C
E) A, B, and C
____ 10. The collection of an account receivable does
which of the following?
A) Increases total assets
B) Increases owners' equity
C) Increases revenues
D) A and C
E) None of the above
____ 11. The purchase of an asset for cash will
A) increase total assets and decrease total liabilities
B) have no effect on total assets or total liabilities
C) increase total assets and increase total liabilities
D) increase total assets and increase total owner’s
equity
____ 12. A current asset which includes coins, currencies
and bank deposits is called
A) Cash equivalents
B) Notes receivable
C) Accounts receivable
D) Accounts payable
____ 13. The purchase of supplies for cash will
A) Increase Supplies and decrease Cash
B) Increases Supplies Expense and decrease Cash
C) Decrease Cash and increase Accounts Payable
D) Increase Supplies Expense and increase Accounts
Payable
E) Decrease Cash and increase Capital
____ 14. When an entity acquires computer equipment
for cash,
A) Assets and owner’s equity are increased
B) An asset is increased and a liability is decreased
C) One asset is increased and another is also
increased
D) One asset is increased while another is decreased
____ 15. When an entity receives cash for services
performed,
A) An asset is decreased
B) The owner’s equity is increased
C) The owner’s equity is decreased
D) Total assets remain unchanged
E) None of the above
____ 16. Art Supplies account is classified as a(n)
A) Assets
B) Liability, if the supplies have not yet been paid for
C) Owner's Equity account
D) Expense
____ 17. When an entity acquires computer equipment
for cash,
A) one asset is increase and another is also increased
B) one asset is increased while the other is decreased
C) asset and owner’s equity are increased
D) one asset is increased and a liability is decreased
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