Accounting Quizzes Ch. 1

If the liabilities of a business increased $75,000 during a period of time and the stockholders' equity in the business decreased $30,000 during the same period, the assets of the business must have: A. Increased $45,000. B. Decreased $45,000. C. Increased $105,000. D. Decreased $105,000. E. Increased $30,000.

A. Increased $45,000.

Retained earnings at the beginning and ending of the accounting period were $300 and $800, respectively. Revenues of $1,100 and dividends paid to stockholders of $200 were reported during the period. What was the amount of expenses reported for the period? A) $500 B) $400 C) $900 D) $700

B) $400

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit. How does this transaction affect the accounting equation for Atkins? A. Assets would decrease $1,750 and liabilities would decrease $1,750. B. One asset would increase $1,750 and a different asset would decrease $1,750, causing no net change in the accounting equation. C. Assets would increase $1,750 and equity would increase $1,750. D. Assets would increase $1,750 and liabilities would increase $1,750. E. Liabilities would decrease $1,750 and equity would increase $1,750.

B. One asset would increase $1,750 and a different asset would decrease $1,750, causing no net change in the accounting equation.

Deacon Inc. reported assets of $50,000, liabilities of $22,000 and common stock of $15,000. Based on this information, what is the amount of the Deacon Inc.'s retained earnings? A) $7,000. B) $57,000. C) $13,000. D) $87,000.

C) $13,000.

Savvy Sightseeing had beginning equity of $73,000; revenues of $93,000, expenses of $66,000, and dividends to stockholders of $9,100. There were no stockholder investments during the year. Calculate ending equity. A. $46,000. B. $27,000. C. $90,900. D. $100,000. E. $36,900.

C. $90,900.

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation? A. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would decrease $38,000. B. Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase $38,000. C. Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged. D. There would be no effect on the accounts because the accounts are affected by the same amount. E. Assets would increase $38,000 and liabilities would decrease $38,000.

C. Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect? A. Cash was received from providing services to a customer. B. Cash was received as a stockholder investment. C. Equipment was purchased on credit. D. Supplies were purchased for cash. E. Advertising expense for the month was paid in cash.

C. Equipment was purchased on credit.

Deacon Inc. provided consulting services to a customer for $5,500 cash. Based on this information, which of the following statements istrue? A) Total assets increased and total equity decreased. B) Total assets were unchanged. C) Liabilities decreased and net income increased. D) Total assets increased and net income increased.

D) Total assets increased and net income increased.

On May 31 of the current year, the assets and liabilities of Riser, Incorporated are as follows: Cash $21,500; Accounts Receivable, $7,400; Supplies, $750; Equipment, $12,150; Accounts Payable, $9,500. What is the amount of equity as of May 31 of the current year? B. $51,300. B. $13,150. C. $21,500. D. $32,300. E. $41,800

D. $32,300.

Net income: A. Decreases equity. B. Represents the amount of assets owners put into a business. C. Equals assets minus liabilities. D. Is the excess of revenues over expenses. E. Represents owners' claims against assets.

D. Is the excess of revenues over expenses.

Earning revenue a. increases assets, increases stockholders' equity b. increases assets, decreases stockholders' equity c. increases one asset, decreases another asset d. decreases assets, increases liabilities

a. increases assets, increases stockholders' equity

Which of the following is not a business transaction? a. make a sales offer b. sell goods for cash c. receive cash for services to be rendered later d. pay for supplies

a. make a sales offer

If total liabilities decreased by $46,000 during a period of time and stockholders' equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a a. $106,000 increase b. $14,000 increase c. $14,000 decrease d. $106,000 decrease

b. $14,000 increase

Which of the following is the best description of accounting's role in business? a. Accounting provides stockholders with information regarding the market value of the company's stocks. b. Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company. c. Accounting helps in decreasing the credit risk of the company. d. Accounting is not responsible for providing any form of information to users. That is the role of the Information Systems Department.

b. Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company.

Dividends paid to stockholders decrease assets and increase equity. a. True b. False

b. False

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000. a. True b. False

b. False

If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then the assets also total $300,000. a. True b. False

b. False

If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase. a. True b. False

b. False

A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to a. increase an asset, decrease another asset b. decrease an asset, decrease a liability c. increase an asset, increase a liability d. increase an asset, increase stockholders' equity

b. decrease an asset, decrease a liability

How does receiving a bill to be paid next month for services received affect the accounting equation? a. assets decrease; stockholders' equity decreases b. assets increase; liabilities increase c. liabilities increase; stockholders' equity increases d. liabilities increase; stockholders' equity decreases

d. liabilities increase; stockholders' equity decreases