Accounting Equation Problems MCQs 1

Which of the following will not change the total assets?

Receiving cash from customers

Owner’s cash investment

Taking a bank loan

Paying cash to buy equipment

Correct! Wrong!

Which transaction increases both assets and owner’s equity?

Purchase of furniture for cash

Paying rent

Cash sales to customers

Payment of salaries

Correct! Wrong!

Revenue earned in cash affects?

Liabilities increase, assets decrease

Assets decrease, equity increases

Assets decrease, liabilities decrease

Assets increase, equity increases

Correct! Wrong!

Which of the following best represents the basic accounting equation?

Liabilities = Assets + Equity

Assets = Revenue + Expenses

Assets = Liabilities – Owner’s Equity

Assets = Liabilities + Owner’s Equity

Correct! Wrong!

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

Increase liabilities and decrease equity

Only affect expenses

Decrease assets and increase equity

Increase assets and increase liabilities

Correct! Wrong!

When a company borrows cash from a bank?

Liabilities decrease and equity increases

Assets increase and liabilities increase

Assets increase and equity increases

Assets decrease and liabilities increase

Correct! Wrong!

Which will decrease assets and liabilities simultaneously?

Earning revenue

Paying off a bank loan

Buying inventory on credit

Receiving payment from debtors

Correct! Wrong!

Which transaction decreases assets and decreases equity?

Owner invests cash

Borrowing from a bank

Selling goods for cash

Paying office rent

Correct! Wrong!

Paying cash to settle a supplier’s account will?

Increase assets and increase liabilities

Decrease liabilities and increase equity

Decrease assets and decrease liabilities

Increase assets and decrease equity

Correct! Wrong!

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

$20,000

$30,000

$70,000

$50,000

Correct! Wrong!

Accounting Equation Problems MCQs 1

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Which of the following will not change the total assets?

Which transaction increases both assets and owner’s equity?

Revenue earned in cash affects?

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?

Which will decrease assets and liabilities simultaneously?

Which transaction decreases assets and decreases equity?

Paying cash to settle a supplier’s account will?

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

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