problem1: Gross increases in owner’s equity that can be attributed to ongoing business activities are:
[A] Revenues
[B] Assets
[C] Expenses
[D] Drawings
problem2: Ford Photo Supplies balances at the beginning of January were: Cash $25,000; Accounts Receivable $15,000; Inventory $30,000; Accounts Payable $18,000; Notes Payable $17,000; Owner’s Capital $??. Ford completed the following transactions during January: Paid off the note payable of $17,000.
Sold $36,525 of merchandise to customers on account. Cost of goods sold was $21,250.
Paid accounts payable of $3,500.
Collected $25,000 of the amounts due from customers.
As a result of these transactions, liabilities and owners’ equity at the end of January will total:
[A] Liabilities: $14,500; Owner’s Equity: $50,275
[B] Liabilities: $18,000; Owner’s Equity: $15,275
[C] Liabilities: $35,000; Owner’s Equity: $35,000
[D] Liabilities: $31,500; Owner’s Equity: $71,525
problem3: At the starting of October, Nirvana Carting had total assets of $86,000. During October, Nirvana had the following transactions:
Collected the opening receivables balance of $17,400.
Generated revenues of $50,000, of which 60 percent were cash.
Incurred total expenses of $36,000, 40 percent of which were paid.
Nirvana had no payables balance at the beginning of October.
After these transactions are recorded, Nirvana’s Accounts Receivable and Accounts Payable amount to:
[A] Accounts Rec.: $ 20,000; Accounts Pay.: $21,600
[B] Accounts Rec.: $ 37,400; Accounts Pay.: $30,000
[C] Accounts Rec.: $ -0-; Accounts Pay.: $ -0-
[D] Accounts Rec.: $ 17,400; Accounts Pay.: $14,400
problem4: Machine is purchased with a cash down payment of $60,000 and a signed note for $100,000. The net effect of this transaction will be:
[A] An increase in assets of $160,000
[B] An increase in assets of $60,000
[C] An increase in assets of $100,000
[D] No increase in assets
problem5: At the beginning of October, Nirvana Carting had total owner’s equity of $86,000. During October, Nirvana had the following transactions:
Collected the opening receivables balance of $17,400.
Generated revenues of $50,000, of which 60 percent were cash.
Incurred total expenses of $36,000, 40 percent of which were paid.
Nirvana had no payables balance at the beginning of October.
After these transactions are recorded, Nirvana’s Owner’s Equity balance amounts to:
[A] $135,000
[B] $100,000
[C] $14,000
[D] $86,000