Question 1

Which of the following is an example of an asset?

Accepted Answer

A)   Prepaid Insurance
B)   Accounts Payable
C)   Capital
D)   Outstanding RentE) B) and C)
F) None of the above

Question 2

A business received $600 cash from charge customers to apply on account. The effect of the transaction is an increase in an asset and a(n)

Accepted Answer

A)   increase in revenue.
B)   decrease in capital.
C)   decrease in a liability.
D)   decrease in an asset.
E)   increase in capital.F) A) and B)
G) B) and D)

Question 3

D. Hoffman withdrew $20,000 for personal use from his business. This transaction should be recorded as a(n) :

Accepted Answer

A)   increase in liabilities.
B)   increase in revenue.
C)   decrease in expenses.
D)   decrease in owner's equity.E) A) and B)
F) B) and D)

Question 4

The first step in analyzing a transaction is to determine what accounts are involved.

Accepted Answer

A) True 
 B)False

Question 5

Expenses incurred by a business results in:

Accepted Answer

A)   a decrease in its liabilities.
B)   a decrease in the owner's equity.
C)   an increase in the drawing.
D)   an increase in the assets.E) A) and C)
F) A) and B)

Question 6

Prepaid Insurance is a(n)

Accepted Answer

A)   asset.
B)   liability.
C)   revenue.
D)   expense.E) C) and D)
F) A) and D)

Question 7

Bendada deposited $25,000 in a bank account in the name of the business. Which of the following is true in regards to the fundamental accounting equation?

Accepted Answer

A)   Assets increase by $25,000.
B)   Liabilities increase by $25,000.
C)   Assets decrease by $25,000.
D)   Owner's Equity decreases by $25,000.
E)   Liabilities decrease by $25,000.F) B) and E)
G) B) and C)

Question 8

Expenses are recorded

Accepted Answer

A)   when they are paid.
B)   when they are incurred.
C)   in advance or when they are due.
D)   none of the answers listed.E) A) and B)
F) A) and C) B

Question 9

The expanded accounting equation is

Accepted Answer

A)   assets = liabilities + capital + drawing + revenue - expenses
B)   assets = liabilities - capital + drawing - revenue + expenses
C)   assets = liabilities + capital - drawing + revenue - expenses
D)   assets + capital = liabilities - drawing + revenue - expensesE) All of the above
F) C) and D)

Question 10

An exchange of assets has no effect on the totals of the accounting equation.

Accepted Answer

A) True 
 B)False  True

Question 11

The purchase of an asset (like Equipment)  on account will

Accepted Answer

A)   increase total liabilities and decrease total assets.
B)   have no effect on total assets or total liabilities.
C)   increase total assets and increase total liabilities.
D)   increase total assets and increase owner's equity.
E)   increase total assets and decrease owner's equity.F) A) and D)
G) B) and E)

Question 12

If an owner invests his or her computer, printer, and cash in the business, there is an increase in:

Accepted Answer

A)   Cash and Accounts Payable.
B)   Computer Equipment, Accounts Payable, and Drawing.
C)   Cash and Drawing.
D)   Computer Equipment and Expenses.
E)   Computer Equipment, Cash, and CapitalF) A) and E)
G) D) and E) E

Question 13

The owner of a business invested $5,000 in the business. What are the effects on the fundamental accounting equation?

Accepted Answer

A)   Assets increase $5,000; liabilities, no effect; owner's equity increases $5,000
B)   Assets increase $5,000; liabilities decrease $5,000; owner's equity increases $5,000
C)   Assets increase $5,000; liabilities increase $5,000; owner's equity, no effect
D)   Assets increase $5,000; liabilities, no effect; owner's equity decreases $5,000
E)   Assets decrease $5,000; liabilities, no effect; owner's equity increases $5,000F) A) and E)
G) A) and B)

Question 14

Match the terms below with the correct definitions.
-Assets minus liabilities

Accepted Answer

A)  Creditor
B)  Fundamental accounting equation
C)  Expenses
D)  Accounts
E)  Owner's equityF) Accounts receivableG) AssetH) CashI) Business entityJ) D) and H)
K) C) and H)

Question 15

Which of the following equations is the fundamental accounting equation?

Accepted Answer

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 = LiabilitiesF) A) and B)
G) B) and D)

Question 16

The effect of expenses on the fundamental accounting equation is a(n)

Accepted Answer

A)   increase to assets.
B)   decrease to owner's equity.
C)   increase to liabilities.
D)   increase to owner's equity.E) A) and C)
F) B) and C)

Question 17

Accounts Payable is a(n)

Accepted Answer

A)   asset.
B)   liability.
C)   revenue.
D)   expense.E) A) and C)
F) C) and D)

Question 18

Accounts Receivable is a(n)

Accepted Answer

A)   asset.
B)   liability.
C)   revenue.
D)   expense.E) B) and D)
F) B) and C)

Question 19

Which of the following is true?

Accepted Answer

A)   Double-entry accounting requires that each transaction be recorded in at least one account.
B)   Every transaction is recorded as an increase and/or decrease in two or more accounts.
C)   Double-entry accounting requires that each transaction be recorded in only two accounts.
D)   After a transaction has been recorded it is acceptable for the accounting equation to be out of balance.E) C) and D)
F) A) and B)

Question 20

Palmer Hand Clinic has the following accounts and balances: 
Cash, $2,350
Accounts Receivable, $280
Professional Equipment, $1,200
Office Equipment, $6,700
Accounts Payable, $4,380
P.Palmer, Capital, $2,000
Income from Services, $6,000
Rent Expense, $1,850
What is the amount of owner's equity?

Accepted Answer

A)   $6,150
B)   $2,000
C)   $8,000
D)   $4,150E) A) and C)
F) A) and D)

Exam 1: Asset, Liability, Owners Equity, Revenue, and Expense Accounts

Which of the following is an example of an asset?

Correct AnswerverifiedShow Answer

A business received $600 cash from charge customers to apply on account. The effect of the transaction is an increase in an asset and a(n)

Correct AnswerverifiedShow Answer

D. Hoffman withdrew $20,000 for personal use from his business. This transaction should be recorded as a(n) :

Correct AnswerverifiedShow Answer

The first step in analyzing a transaction is to determine what accounts are involved.

Correct AnswerverifiedShow Answer

Expenses incurred by a business results in:

Correct AnswerverifiedShow Answer

Prepaid Insurance is a(n)

Correct AnswerverifiedShow Answer

Bendada deposited $25,000 in a bank account in the name of the business. Which of the following is true in regards to the fundamental accounting equation?

Correct AnswerverifiedShow Answer

Expenses are recorded

Correct AnswerverifiedB

The expanded accounting equation is

Correct AnswerverifiedShow Answer

An exchange of assets has no effect on the totals of the accounting equation.

Correct AnswerverifiedTrue

The purchase of an asset (like Equipment) on account will

Correct AnswerverifiedShow Answer

If an owner invests his or her computer, printer, and cash in the business, there is an increase in:

Correct AnswerverifiedE

The owner of a business invested $5,000 in the business. What are the effects on the fundamental accounting equation?

Correct AnswerverifiedShow Answer

Match the terms below with the correct definitions. -Assets minus liabilities

Correct AnswerverifiedShow Answer

Which of the following equations is the fundamental accounting equation?

Correct AnswerverifiedShow Answer

The effect of expenses on the fundamental accounting equation is a(n)

Correct AnswerverifiedShow Answer

Accounts Payable is a(n)

Correct AnswerverifiedShow Answer

Accounts Receivable is a(n)

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Palmer Hand Clinic has the following accounts and balances: Cash, $2,350 Accounts Receivable, $280 Professional Equipment, $1,200 Office Equipment, $6,700 Accounts Payable, $4,380 P.Palmer, Capital, $2,000 Income from Services, $6,000 Rent Expense, $1,850 What is the amount of owner's equity?

Correct AnswerverifiedShow Answer

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B

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True

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E

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