Purchase of inventory on creditincreases assets and, Ask an Expert

Accounting

1. If corporation has assets of $250,000, liabilities of $70,000, and capital stock of $1,000, compute amount of retained earnings?

a. $30,000
b. $0
c. $60,000
d. $1,000

2. When owners invest money in their business, effect on accounting equation is that investment:

a. Increases assets and decreases owners' equity.
b. Increases assets and increases liabilities.
c. Decreases assets and decreases owners' equity.
d. Increases assets and increases owners' equity.

3. Purchase of inventory on credit:

a. Increases assets and decreases liabilities.
b. Increases liabilities and decreases assets
c. Increases assets and increases liabilities.
d. Decreases assets and decreases liabilities.

4. Revenue account is increased with:

a. Debits.
b. Credit.
c. Equities.
d. None of the above.

5. Company's retained earnings balance is increased by

a. Net income.
b. Expenses.
c. Investments by owners.
d. The declaration and payment of dividends.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M919789

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