Q. What does a balance sheet represent?
-
A.
A summary of revenues and expenses
-
B.
A snapshot of assets, liabilities, and equity at a specific point in time
-
C.
A record of cash inflows and outflows
-
D.
A report of financial performance over a period
Solution
A balance sheet represents a snapshot of a company's assets, liabilities, and equity at a specific point in time.
Correct Answer:
B
— A snapshot of assets, liabilities, and equity at a specific point in time
Learn More →
Q. What is the accounting equation?
-
A.
Assets = Liabilities + Equity
-
B.
Assets + Liabilities = Equity
-
C.
Assets = Liabilities - Equity
-
D.
Assets + Equity = Liabilities
Solution
The accounting equation states that Assets equal Liabilities plus Equity, forming the foundation of double-entry accounting.
Correct Answer:
A
— Assets = Liabilities + Equity
Learn More →
Q. What is the effect of a purchase return on the accounting equation?
-
A.
Increases assets and decreases liabilities
-
B.
Decreases assets and decreases expenses
-
C.
Decreases assets and decreases liabilities
-
D.
Increases liabilities and decreases equity
Solution
A purchase return decreases assets (inventory) and decreases expenses, as it reduces the cost of goods sold.
Correct Answer:
B
— Decreases assets and decreases expenses
Learn More →
Q. What is the journal entry for purchasing inventory on credit for $500?
-
A.
Debit Inventory $500, Credit Cash $500
-
B.
Debit Inventory $500, Credit Accounts Payable $500
-
C.
Debit Accounts Payable $500, Credit Inventory $500
-
D.
Debit Cash $500, Credit Inventory $500
Solution
The correct entry is to debit Inventory and credit Accounts Payable, reflecting the increase in inventory and the obligation to pay.
Correct Answer:
B
— Debit Inventory $500, Credit Accounts Payable $500
Learn More →
Showing 1 to 4 of 4 (1 Pages)
