Revenue earned in cash affects?

Liabilities increase, assets decrease

Assets decrease, equity increases

Assets increase, equity increases

Assets decrease, liabilities decrease

Correct! Wrong!

Which will decrease assets and liabilities simultaneously?

Earning revenue

Buying inventory on credit

Receiving payment from debtors

Paying off a bank loan

Correct! Wrong!

Which of the following will not change the total assets?

Paying cash to buy equipment

Taking a bank loan

Owner’s cash investment

Receiving cash from customers

Correct! Wrong!

Which transaction decreases assets and decreases equity?

Selling goods for cash

Paying office rent

Borrowing from a bank

Owner invests cash

Correct! Wrong!

Which transaction increases both assets and owner’s equity?

Purchase of furniture for cash

Paying rent

Payment of salaries

Cash sales to customers

Correct! Wrong!

Paying cash to settle a supplier’s account will?

Decrease liabilities and increase equity

Increase assets and decrease equity

Increase assets and increase liabilities

Decrease assets and decrease liabilities

Correct! Wrong!

Which of the following best represents the basic accounting equation?

Liabilities = Assets + Equity

Assets = Liabilities – Owner’s Equity

Assets = Liabilities + Owner’s Equity

Assets = Revenue + Expenses

Correct! Wrong!

If a business buys equipment on credit, the accounting equation will?

Only affect expenses

Increase liabilities and decrease equity

Decrease assets and increase equity

Increase assets and increase liabilities

Correct! Wrong!

When a company borrows cash from a bank?

Assets increase and equity increases

Liabilities decrease and equity increases

Assets increase and liabilities increase

Assets decrease and liabilities increase

Correct! Wrong!

If assets are $50,000 and liabilities are $20,000, equity equals?

$20,000

$70,000

$50,000

$30,000

Correct! Wrong!

Accounting Equation Problems MCQs 1

Revenue earned in cash affects?

Which will decrease assets and liabilities simultaneously?

Which of the following will not change the total assets?

Which transaction decreases assets and decreases equity?

Which transaction increases both assets and owner’s equity?

Paying cash to settle a supplier’s account will?

Which of the following best represents the basic accounting equation?

If a business buys equipment on credit, the accounting equation will?

When a company borrows cash from a bank?

If assets are $50,000 and liabilities are $20,000, equity equals?

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