Bliss Corporation settles a liability by making a payment in cash. How does paying this liability affect the accounting equation of the business? A) assets and liabilities decrease B) liabilities decrease and equity increases C) assets and liabilities increase D) assets increase and equity decreases ANSWER A
Date: September 2nd, 2020
Murphy Corporation had originally purchased land for $38,000. It later sold it for $38,000 in cash. Which of the following is true of the effect of the sale of land on the accounting equation? A) assets increase and liabilities decrease by $38,000 B) assets and equity increase by $76,000 C) assets increase by $38,000; equity […]
Date: September 2nd, 2020
Accord Corporation purchased land for $100,000 by making a cash payment of $30,000 and promising to pay the remaining amount in a later accounting period. What is the net effect of this transaction on Accord’s accounting equation? A) assets increase by $100,000 and liabilities decrease by $30,000 B) assets increase by $100,000 and liabilities decrease […]
Date: September 2nd, 2020
Exchange Corporation collected $8,000 from one of its customers, the amount owed from the previous month. How does this affect the accounting equation for Exchange? A) assets increase by $8,000; liabilities decrease by $8,000 B) assets increase by $8,000; assets decrease by $8,000 C) assets increase by $8,000; liabilities increase by $8,000 D) assets increase […]
Date: September 2nd, 2020
Star Homes Corporation just recorded a transaction in its books. If this transaction increased the total liabilities by $12,000, then ________. A) assets must increase, or equity must decrease by $12,000 B) either assets or equity must decrease by $12,000 C) both assets and equity must each decrease by $6,000 D) assets must decrease by […]
Date: September 2nd, 2020
Which of the following can be an effect of a transaction that increased an asset of a corporation for the accounting equation to balance? A) there is an equal decrease in another asset B) there is an equal decrease in equity C) there is an equal decrease in a liability account D) both liabilities and […]
Date: September 2nd, 2020
Reliable Waterworks Corporation provides plumbing services. Transactions of Reliable Waterworks during the first year of operations are given below. a) Received $11,000 cash and issued common stock to Sharon b) Paid $2,000 for equipment to be used for plumbing repairs. c) Borrowed $10,000 from a local bank and deposited the money in the checking account. […]
Date: September 2nd, 2020
Merchant Corporation provides plumbing services. Transactions of Merchant during the first year of operations are given below. a) Received $12,000 cash and issued common stock to Sharon b) Paid $1,600 cash for equipment to be used for plumbing repairs. c) Borrowed $14,000 from a local bank and deposited the money in the checking account. d) […]
Date: September 2nd, 2020
Crusoe Waterworks Corporation provides plumbing services. Transactions of Crusoe Waterworks during the first year of operations are given below. a) Received $4,000 cash and issued common stock to Robinson b) Paid $3,000 cash for equipment to be used for plumbing repairs. c) Borrowed $27,000 from a local bank and deposited the money in the checking […]
Date: September 2nd, 2020
Which of the following is true of retained earnings? A) Retained earnings decrease with payment of dividends. B) Retained earnings increase with purchase of assets. C) Retained earnings decrease with collection of revenue. D) Retained earnings increase with payment on account. ANSWER A
Date: September 2nd, 2020
