Multiple Choice Answers

Question 1 of 20
Go Blue Retail Store collected $12,000 of its accounts receivable. The expanded accounting equation changes include which of the following?

A. Cash and capital increase of $12,000
B. Cash and revenue increase of $12,000
C. Cash increase and accounts receivable decrease of $12,000
D. Accounts receivable decrease and capital increase of $12,000
Question 2 of 20
A company has the following balances in its asset accounts: Cash, $750; Accounts Receivable, $125; Equipment, $2,000; Supplies, $875. The amount of the company’s total assets is

A. $875.
B. $1,750.
C. $2,875.
D. $3,750.
Question 3 of 20
An accounting report that shows the changes in capital during the accounting period is a/an

A. balance sheet.
B. income statement.
C. statement of owner’s equity.
D. All of the above
Question 4 of 20
The net income or net loss is calculated on the

A. balance sheet.
B. statement of owner’s equity.
C. income statement.
D. None of the above
Question 5 of 20
Which financial statement shows business results in terms of revenue and expenses?

A. Income statement
B. Balance sheet
C. Statement of owner’s equity
D. Statement of cash flows
Question 6 of 20
Which items are on both the balance sheet and the statement of owner’s equity?

A. Net loss
B. Capital
C. Additional owner’s investments
D. Owner’s withdrawals
Question 7 of 20
Carrie billed her legal clients $6,000 for legal work completed during the month. This transaction will

A. cause a $6,000 increase in revenues and liabilities.
B. cause a $6,000 increase in revenues and a decrease in liabilities.
C. cause a $6,000 increase in assets and revenues.
D. not be recorded until the cash is collected.
Question 8 of 20
The financial statement that shows revenue and expenses for a period of time is the

A. balance sheet.
B. income statement.
C. statement of owner’s equity.
D. statement of cash flows.
Question 9 of 20
Which financial statement is considered a link between the income statement and balance sheet?

A. Statement of cash flows
B. Statement of company assets
C. Statement of company liquidity
D. Statement of owner’s equity
Question 10 of 20
Which of the following is true about expenses?

A. They’re costs the company incurs in carrying out operations.
B. They’re a subdivision of owner’s equity.
C. They record personal expenses not related to the business.
D. Both A and B
Question 11 of 20
The statement of owner’s equity contains the

A. owner’s capital for the beginning of the period.
B. liabilities of the company.
C. total amount owed by credit customers.
D. balance in the cash account.
Question 12 of 20
Vic’s Mart collects $700 of its accounts receivable. The expanded accounting equation impact is a/an

A. cash and capital increase of $700.
B. cash and revenue increase of $700.
C. cash increase and accounts receivable decrease of $700.
D. accounts receivable decrease and capital increase of $700.
Question 13 of 20
Which accounts are affected when the company buys supplies on account?

A. Assets and capital
B. Liabilities and capital
C. Assets and liabilities
D. None of the above
Question 14 of 20
Which transaction has no effect on owner’s equity?

A. Paying salaries expense
B. Equipment purchase
C. Billing for services rendered
D. A withdrawal
Question 15 of 20
Which of the following is included in the balance sheet?

A. Revenue
B. Salaries expense
C. Utilities expense
D. Accounts payable
Question 16 of 20
If a company’s revenues are higher than its expenses, it will cause

A. an increase in owner’s equity.
B. a decrease in owner’s equity.
C. an increase in assets.
D. no effect on owner’s equity.
Question 17 of 20
The increase or decrease in owner’s equity is reported on the

A. income statement.
B. statement of owner’s equity.
C. balance sheet.
D. All of the above
Question 18 of 20
When services are rendered but payment isn’t made, which account would be increased?

A. Accounts receivable
B. Accounts payable
C. Cash
D. Withdrawal
Question 19 of 20
BPK Industries has a net income for the period of $2,500. The balance in the Owner’s Capital account for the beginning of the period is $5,000, and the owner has withdrawn $1,650 for personal expenses. The balance in the Owner’s Capital account at the end of the period will be

A. $850.
B. $5,850.
C. $7,500.
D. $9,150.
Question 20 of 20
A company has $4,500 in its Revenue account at the end of a period. The expenses are as follows: Rent, $750; Utilities, $150; Salaries, $2,400; Insurance, $225. The net income (loss) for the period is

A. $3,600.
B. ($2,100).
C. $975.
D. ($1,425).