This post addresses financial accounting practice questions.
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1. By definition, which of the following represents the owners of a corporation?
a Customers
b Creditors
c Stockholders
c Employees
2. An individual asset has increased. Which of the following is possible?
a There is an equal decrease in another asset.
b There is an equal decrease in owner's equity.
c There is an equal decrease in a liability account.
d Both liabilities and owner's equity decrease.
3. The following transactions have been journalized and posted to the proper accounts.
Mark Call invested $7,000 cash in his new design services business.
The business paid the first month's rent of $700.
The business purchased equipment by paying $2,000 cash and executing a note payable for $4,500.
The business purchased supplies for $850 cash.
The business billed a client for $4,000 of design services completed.
The business received $3,000 of the account for the completed services.
What is the balance in Cash?
a $7,850
b $6,450
c $8,450
d $8,150
e None of these is correct
4. A proprietor makes a cash withdrawal from the proprietorship. How does this affect the accounting equation?
a This has no effect on assets, liabilities, or owner's equity.
b Assets decrease; owner's equity decreases.
c Assets increase; liabilities decrease.
d Assets decrease; owner's equity increases.
5. A business settles a liability by making a payment with cash. How does paying this liability affect the accounting equation?
a Assets decrease; liabilities decrease.
b Liabilities decrease; owner's equity increases.
c Assets increase; liabilities increase.
d Assets increase; liabilities decrease.
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Solution Summary
The solution provides the correct answers with explanations for five multiple choice study questions. All relevant calculations are shown.
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Help with your homework study questions:
1. By definition, which of the following represents the owners of a corporation?
a Customers
b Creditors
c Stockholders CORRECT
c Employees
2. An individual asset has increased. Which of the following is possible?
a There is an equal decrease in another asset. -- This could also be true. If a customer paid their A/R, it would decrease their A/R but raise the cash account in the amount of the payment.
b There is an equal decrease in owner's equity. This is incorrect
c ...
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