🎯Accounting Equation Quiz 2: 22 MCQs

—————– are the resources of a company which are used to generate profits.

When a company sells goods or performs a service, its —————– increase resulting in an increase in equity.

According to the accounting equation, the difference between the assets and liabilities of a company is:

Funding assets through creditors (i.e. banks) is recorded as:

In order to sell goods or provide a service, companies incur —————– which reduce the amount of equity.

Which of the following best describes revenue?

If assets are $101,000 and equity is $42,000, then liabilities equal:

Equity and ________ have the same meaning.

Distributions of cash or other resources by a business to its stockholders:

If a company has assets of $420,000 and equity of $180,000, then the company owes a total of ________ to its creditors.

A company witnessed a $50,000 increase in its assets and a $22,000 decrease in liabilities. Then the stockholder’s equity:

Throughout February, a company’s accounts payable increased by $37,000, whereas its retained earnings decreased by $14,000. Assume no other accounts of liabilities and equity changed, then:

A company purchases new equipment for $50,000. This purchase is financed through a loan from the bank. How should this transaction be classified on the company’s balance sheet?

Which of the following scenarios would result in a decrease in a company’s equity?

A software company provides services on credit worth $10,000. How will this transaction be recorded?

Which of the following would appear as a current liability on the balance sheet?

A company declares and pays dividends of $5,000. How will this transaction affect the company’s equity?

Which of the following best describes accounts payable?

A retail company issues common stock worth $20,000. How does this transaction affect the company’s balance sheet?

A construction company pays off a loan early. Which of the following reflects this transaction?

Which of the following would be classified as a non-current asset?

A company earns $15,000 in revenue from services provided. How does this transaction affect the company’s financial statements?