18. The acquisition of an asset on credit A) leaves the total assets unchanged B) decreases assets and increases liabilities C) increases assets and liabilities D) increases assets and owner’s equity
____ 18. The acquisition of an asset on credit
A) leaves the total assets unchanged
B) decreases assets and increases liabilities
C) increases assets and liabilities
D) increases assets and owner’s equity
____ 19. The account records long-term debt of the
business entity for which it has pledged certain
assets as security
A) notes payable
B) accounts payable
C) mortgage payable
D) bonds payable
____ 20. The accounting equation
A) is used to determine the amount of liabilities owed
B) is used to determine the amount of income earned
during the period
C) shows the claims on the owner’s equity by the
creditors
D) shows the claims on the entity’s assets by both the
creditors and the owner
____ 21. When the proprietor withdraws cash or other
assets, the withdrawal account is
A) debited
B) credited
C) debited and credited
D) not affected
____ 22. A credit entry decreases the balance of
A) owner’s equity
B) assets
C) income
D) liabilities
____ 23. When an entity pays employees for their
services, the effect is an increase in
A) expenses
B) assets
C) income
D) liabilities
____ 24. All of the following affect the owner’s equity
account except
A) Original investment
B) Payment of liability
C) additional investment
D) withdrawal by the owner
____ 25. Which of the following is an asset of the firm?
A) The capital of the firm
B) Computer Equipment owned by the firm
C) Money owed by the firm for purchases made on
credit
D) An overdrawn balance on the firm’s bank account
____ 26. A P100,000 machine is purchased by paying
P25,000 cash and issuing a promissory note for the
remainder. The entry should include
A) Cr. to Machinery
B) Dr. to Cash
C) Cr. to Notes Payable
D) Cr. to Notes Receivable
____ 27. A purchase is recognized in the accounting
records when
A) payment is made for the item purchased
B) the purchase requisition is sent to the purchasing
department
C) the seller delivers the goods to the buyer and were
received by the buyer
D) the buyer receives the seller’s bill
____ 28. All of the following are assets except
A) equipment
B) unearned revenue
C) cash
D) inventory
____ 29. Which of the following is an asset account?
A) insurance expense
B) Supplies expense
C) Office Equipment
D) Sales
____ 30. A debit may signify a decrease in
A) a liability account
B) an asset account
C) an expense account
D) a withdrawal account
____ 31. A purchase of supplies on account should be
recorded as
A) Dr. Supplies Expense and Cr. Cash
B) Dr. Accounts Payable and Cr. Supplies
C) Dr. Supplies Expense and Cr. Accounts Payable
D) Dr. Supplies Expense and Cr. Accounts Receivable
____ 32. Which of the following accounts is increased
with a debit?
A) Owner’s Withdrawals
B) Legal Revenues
C) Rent Payable
D) Owner’s Capital
____ 33. Which of the following account is increased
with a credit?
A) Supplies expense
B) Supplies
C) Revenues
D) Owner’s Withdrawals
____ 34. A withdrawal by the owner of a business will
A) increase liabilities
B) decrease owner’s equity
C) not affect total assets
D) decrease profit
____ 35. An entry with more than one debit or credit is
called a
A) double entry
B) compound entry
C) dual entry
D) multiple entry
Step by step
Solved in 2 steps
