Accounting Equation Problems MCQs 1

Paying cash to settle a supplier’s account will?

Decrease liabilities and increase equity

Decrease assets and decrease liabilities

Increase assets and increase liabilities

Increase assets and decrease equity

Correct! Wrong!

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

$20,000

$70,000

$30,000

$50,000

Correct! Wrong!

Which transaction increases both assets and owner’s equity?

Paying rent

Purchase of furniture for cash

Payment of salaries

Cash sales to customers

Correct! Wrong!

Which transaction decreases assets and decreases equity?

Paying office rent

Selling goods for cash

Owner invests cash

Borrowing from a bank

Correct! Wrong!

Revenue earned in cash affects?

Assets increase, equity increases

Liabilities increase, assets decrease

Assets decrease, liabilities decrease

Assets decrease, equity increases

Correct! Wrong!

When a company borrows cash from a bank?

Assets decrease and liabilities increase

Assets increase and liabilities increase

Liabilities decrease and equity increases

Assets increase and equity increases

Correct! Wrong!

Which of the following best represents the basic accounting equation?

Assets = Revenue + Expenses

Assets = Liabilities + Owner’s Equity

Liabilities = Assets + Equity

Assets = Liabilities – Owner’s Equity

Correct! Wrong!

Which of the following will not change the total assets?

Owner’s cash investment

Receiving cash from customers

Paying cash to buy equipment

Taking a bank loan

Correct! Wrong!

Which will decrease assets and liabilities simultaneously?

Buying inventory on credit

Paying off a bank loan

Receiving payment from debtors

Earning revenue

Correct! Wrong!

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

Increase liabilities and decrease equity

Increase assets and increase liabilities

Only affect expenses

Decrease assets and increase equity

Correct! Wrong!

Paying cash to settle a supplier’s account will?

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

Which transaction increases both assets and owner’s equity?

Which transaction decreases assets and decreases equity?

Revenue earned in cash affects?

When a company borrows cash from a bank?

Which of the following best represents the basic accounting equation?

Which of the following will not change the total assets?

Which will decrease assets and liabilities simultaneously?

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

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