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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

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921738

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