1) What is the accounting equation? a) Assets = Liabilities x Owner’s Equity b) Assets = Liabilities - Owner’s Equity c) Assets = Liabilities + Owner’s Equity 2) What happens to the equation when the business earns revenue? a) Revenue decreases Owner's Equity b) Revenue increases Owner’s Equity c) The right side of the equation decreases 3) What effect does purchasing supplies on credit have? Choose the wrong answer. a) Assets (Supplies) increase b) Liabilities (Accounts Payable) decrease c) Liabilities (Accounts Payable) increase 4) Which is NOT an obligation of the business? a) Loans Payable b) Wages Payable c) Cash In Bank 5) Which of the following is NOT an effect of paying rent in advance for 3 months? a) Cash (Asset) decreases b) Total assets do not remain the same. c) Prepaid Rent (Asset) increases 6) Given: Assets = ₱100,000, Liabilities = ₱35,000. Compute Equity. a) ₱135,000 b) ₱65,000 c) ₱0 7) Given: Equity = ₱80,000, Liabilities = ₱20,000. Compute Assets. a) ₱100,000 b) ₱60,000 c) ₱0 8) Beginning Capital: ₱30,000, Revenue: ₱10,000, Expenses: ₱4,000, Withdrawal: ₱3,000.  Compute Ending Equity. a) ₱33,000 b) ₱37,000 9) A business purchased equipment worth ₱20,000 by paying cash. What is the net effect on total assets? a) increase by ₱20,000. b) ₱0-no effect 10) Hazel invested ₱40,000. She earned ₱15,000, paid ₱6,000 for utilities, and withdrew ₱4,000. Compute her final equity. a) ₱51,000 b) ₱45,000 11) Cash: ₱20,000, Equipment: ₱25,000, Accounts Payable: ₱10,000. What is the Equity? a) ₱35,000 b) ₱0 12) Capital: ₱50,000, Revenues: ₱10,000, Expenses: ₱2,000, Withdrawals: ₱1,000, Liabilities: ₱5,000, Compute total Assets. a) ₱57,000 b) ₱62,000 13) A business has ₱75,000 in assets and ₱25,000 in liabilities. During the period, the owner earned ₱12,000, spent ₱5,000 on expenses, and withdrew ₱2,000. What was the beginning capital?  a) ₱45,000 b) ₱50,000 14) Revenue = ₱8,000, Expenses = ₱2,500, Withdrawals = ₱1,500, Capital = ₱10,000, Liabilities = ₱4,000. Compute Total Assets. a) ₱14,000 b) ₱18,000 15) A business has assets of ₱60,000. It owes ₱18,000 and earned ₱10,000 this month. Expenses totaled ₱3,000 and the owner took ₱2,000. Compute Beginning Capital. a) ₱37,000 b) ₱42,000 16) What is the effect of incurring unpaid electricity expense? a) Liabilities (Utilities Payable) increase b) Owner’s Equity increases (Expense) 17) The residual interest in the assets of the business after deducting liabilities. a) Asset b) Owner's Drawings c) Owner's Equity 18) A customer paid ₱10,000 cash for a previous credit sale. Which of the following is NOT a net change in total assets? a) Cash ↑ ₱10,000 b) Accounts Receivable ↑ ₱10,000 c) ₱0 19) The owner withdrew ₱8,000 from the business, but had also contributed the same amount earlier in the day. What is the net effect on owner’s equity? a) Owner’s Capital ↓ ₱8,000 b) ₱0 20) At the end of the month, a business has assets of ₱120,000 and liabilities of ₱40,000. During the month, the owner added ₱30,000, earned ₱25,000, paid ₱10,000 in expenses, and withdrew ₱5,000. What was the beginning capital? a) ₱80,000 b) ₱40,000

Accounting Equation!

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