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    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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    https://brainmass.com/business/financial-accounting-bookkeeping/this-post-addresses-financial-accounting-practice-questions-472231

    Solution Preview

    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 ...

    Solution Summary

    The solution provides the correct answers with explanations for five multiple choice study questions. All relevant calculations are shown.

    $2.19

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