Accounting Equation Problems MCQs 1

Which transaction increases both assets and owner’s equity?

Cash sales to customers

Purchase of furniture for cash

Paying rent

Payment of salaries

Correct! Wrong!

Paying cash to settle a supplier’s account will?

Decrease liabilities and increase equity

Increase assets and increase liabilities

Increase assets and decrease equity

Decrease assets and decrease liabilities

Correct! Wrong!

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

$50,000

$70,000

$20,000

$30,000

Correct! Wrong!

Which of the following best represents the basic accounting equation?

Assets = Liabilities + Owner’s Equity

Assets = Liabilities – Owner’s Equity

Liabilities = Assets + Equity

Assets = Revenue + Expenses

Correct! Wrong!

Which of the following will not change the total assets?

Receiving cash from customers

Owner’s cash investment

Paying cash to buy equipment

Taking a bank loan

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 transaction decreases assets and decreases equity?

Owner invests cash

Borrowing from a bank

Selling goods for cash

Paying office rent

Correct! Wrong!

When a company borrows cash from a bank?

Assets decrease and liabilities increase

Assets increase and equity increases

Assets increase and liabilities increase

Liabilities decrease and equity increases

Correct! Wrong!

Revenue earned in cash affects?

Assets decrease, liabilities decrease

Liabilities increase, assets decrease

Assets increase, equity increases

Assets decrease, equity increases

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!

Accounting Equation Problems MCQs 1

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Accounting Equation Problems MCQs 1

Which transaction increases both assets and owner’s equity?

Paying cash to settle a supplier’s account will?

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

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?

Which transaction decreases assets and decreases equity?

When a company borrows cash from a bank?

Revenue earned in cash affects?

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

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