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    Accounting Equation MCQs

    Uploaded by

    Vivek Ratan
    The document contains 20 multiple choice questions testing understanding of accounting equation concepts. The accounting equation is Assets = Capital + Liabilities, representing that what is owned (assets) is financed by what is owed (liabilities) and ownership claims (capital). Questions cover how different business transactions would affect the equation elements of assets, liabilities, capital/equity. The practical implementation of the accounting equation is the statement of financial position.

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    © All Rights Reserved
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    Accounting Equation MCQs

    Uploaded by

    Vivek Ratan
    6K views4 pages
    The document contains 20 multiple choice questions testing understanding of accounting equation concepts. The accounting equation is Assets = Capital + Liabilities, representing that what is owned (assets) is financed by what is owed (liabilities) and ownership claims (capital). Questions cover how different business transactions would affect the equation elements of assets, liabilities, capital/equity. The practical implementation of the accounting equation is the statement of financial position.

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     Accounting Equation MCQs

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     Accounting Equation MCQs

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    The document contains 20 multiple choice questions testing understanding of accounting equation concepts. The accounting equation is Assets = Capital + Liabilities, representing that what is owned (assets) is financed by what is owed (liabilities) and ownership claims (capital). Questions cover how different business transactions would affect the equation elements of assets, liabilities, capital/equity. The practical implementation of the accounting equation is the statement of financial position.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6K views4 pages

    Accounting Equation MCQs

    Uploaded by

    Vivek Ratan
    The document contains 20 multiple choice questions testing understanding of accounting equation concepts. The accounting equation is Assets = Capital + Liabilities, representing that what is owned (assets) is financed by what is owed (liabilities) and ownership claims (capital). Questions cover how different business transactions would affect the equation elements of assets, liabilities, capital/equity. The practical implementation of the accounting equation is the statement of financial position.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The passage discusses accounting equations and concepts tested in multiple choice questions.

    The basic accounting equation is Assets = Liabilities + Capital.

    If total liabilities decrease, total assets will decrease by the same amount assuming capital remains the same.

    Accounting equation MCQs

    1)

    The Basic accounting equation is

    A) Asset=Expense +Income

    B) Assets=Cash+Capital

    C) Assets=Capital+Liabilities

    D) Assets=Expenses+Capital

    2)

    Find out the value of assets if: Liabilities=$5000 and Capital=$1000

    A) $4000

    B) $6000

    C) $7000

    D) $3000

    3)

    Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total Capital=$5000

    A) $6000

    B) $10,000

    C) $5000

    D) $1000

    4)

    Capital increases if ______ increases

    A) Expenses

    B) Drawings

    C) Interest on capital

    D) Revenue

    5)

    Capital of a business decreases if there is an increase in

    A) Drawings

    B) Income

    C) Gains

    D) Fresh capital

    6)

    If the total liabilities of a business decrease by $5000 what will be the effect on total asset? (assuming the
    amount of capital remain same)

    A) Remain constant

    B) Decrease by $5000

    C) Increase by $5000

    D) Increase by $10,000

    7)

    If the business's owner withdraws cash for his/her personal use what will be the effect on capital?

    A) Increase in capital

    B) Remain the same

    C) Decrease in capital

    D) No effect on capital

    8)

    Net income equal to Revenues minus

    A) Gains

    B) Depreciation

    C) Expenses

    D) Capital expenditures

    9)

    Collection of account receivable will

    A) Increase assets and decrease assets

    B) Increase assets and decrease liabilities

    C) Increase assets and increase capital

    D) Increase assets and increase cash

    10)

    Payment of expenses will ______ the assets

    A) Increase

    B) Reduce

    C) apportion

    D) Overstate
    11)

    Which of the following is the practical implementation of the accounting equation?

    A) Cash flow statement

    B) Income statement
    C) Statement of changes in equity

    D) Statement of financial position

    12)

    Which of the following accounting equation is correct?

    A) Cash+Other assets=Capital-Liabilities

    B) Capital+ Liabilities=Assets+Income

    C) Assets-Liabilities=Capital

    D) Assets+Capital=Liabilities

    13)

    Fresh capital introduction will increase

    A) Assets and liabilities

    B) Assets and equity

    C) Liabilities and equity and bank balance

    D) Capital and liabilities

    14)

    Cash received for services rendered will

    A) Increase cash and liability

    B) Increase equity and liability

    C) Increase fixed assets and cash

    D) Increase cash and equity

    15)

    Which of following best describes the increase in equity expands_______

    A) Business operations

    B) cash outflows

    C) Inflows of cash

    D) Appropriation expenses

    16)

    If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000 What is the Amount


    of total assets?

    A) $5000

    B) $10,000
    C) $15,000

    D) $20,000

    17)

    Depreciation decreases

    A) Liabilities

    B) Cash

    C) Bank

    D) Capital

    18)

    An increase in provision for bad debt will

    A) Decrease net income

    B) Decrease liabilities

    C) Increase net income

    D) Increase liabilities

    19)

    Current assets - Current liabilities=?

    A) Capital

    B) Absorbed capital

    C) Net assets

    D) Net working capital

    20)

    Assets-Liabilities=?

    A) Cash

    B) Equity

    C) Net income

    D) Net expenses

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