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This post addresses accounting practice questions.

1. Equipment is sold for cash in an amount equal to the cost of the equipment recorded on the books. How does this sale affect the accounting equation?
a One asset increases; one asset decreases.
b Assets increase; liabilities increase.
c Assets increase; liabilities decrease.
d Assets increase; owner's equity increases.

2. There are relatively few types of revenue. Which of the following in NOT a type of revenue?
a Common Stock
b Service
c Interest
d Sales

3. A business renders service to a client and sends out a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be TRUE at the time when the invoice is sent out?
a Owner's equity will decrease.
b Total liabilities will increase.
c Total assets will decrease.
d Net income will increase.

4. Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000. During the year, the business earned revenues of $120,000 and incurred expenses of $70,000. Scott made no capital contributions during the year, but did make withdrawals of $60,000.
What is the amount of Scott's net income for the year?
a $50,000
b $10,000
c $30,000
d $40,000

5. A chart of accounts is the book holding all of the company's accounts.
True
False

Solution Preview

Help with your homework study questions:

1. Equipment is sold for cash in an amount equal to the cost of the equipment recorded on the books. How does this sale affect the accounting equation?
a One asset increases; one asset decreases.
b Assets increase; liabilities increase.
c Assets increase; liabilities decrease.
d Assets increase; owner's equity increases. CORRECT

2. There are ...

Solution Summary

The solution provides the correct answers for the accounting study questions listed. All questions are answered.

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