C) Assets decrease $1,300 and equity decreases $1,300.
D) Assets decrease $1,300 and equity increases $1,300.
E) Assets increase $1,300 and liabilities increase $1,300.
114) If a company receives $12,000 from the owner to establish a proprietorship, the effect on the accounting equation would be:
A) Assets decrease $12,000 and equity decreases $12,000.
B) Assets increase $12,000 and liabilities decrease $12,000.
C) Assets increase $12,000 and liabilities increase $12,000.
D) Liabilities increase $12,000 and equity decreases $12,000.
E) Assets increase $12,000 and equity increases $12,000.
115) If a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:
A) Assets increase $4,500 and liabilities decrease $4,500.
B) Equity decreases $4,500 and liabilities increase $4,500.
C) One asset increases $4,500 and another asset decreases $4,500.
D) Assets increase $4,500 and liabilities increase $4,500.
E) Equity increases $4,500 and liabilities decrease $4,500.
116) An example of a financing activity is:
A) Buying office supplies.
B) Obtaining a long-term loan.
C) Buying office equipment.
D) Selling inventory.
E) Buying land.
117) An example of an operating activity is:
A) Paying wages.
B) Purchasing office equipment.
C) Borrowing money from a bank.
D) Selling stock.
E) Paying off a loan.
118) Operating activities:
A) Are the means organizations use to pay for resources like land, buildings and equipment.
B) Involve using resources to research, develop, purchase, produce, distribute and market products and services.
C) Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
D) Are also called asset management.
E) Are also called strategic management.
119) An example of an investing activity is:
A) Paying wages of employees.
B) Withdrawals by the owner.
C) Purchase of land.
D) Selling inventory.
E) Contribution from owner.
120) Net Income:
A) Decreases equity.
B) Represents the amount of assets owners put into a business.
C) Equals assets minus liabilities.
D) Is the excess of revenues over expenses.
E) Represents owners' claims against assets.
121) If equity is $300,000 and liabilities are $192,000, then assets equal:
A) $108,000.
B) $192,000.
C) $300,000.
D) $492,000.
E) $792,000.
122) If assets are $300,000 and liabilities are $192,000, then equity equals:
A) $108,000.
B) $192,000.
C) $300,000.
D) $492,000.
E) $792,000.
123) Resources a company owns or controls that are expected to yield future benefits are:
A) Assets.
B) Revenues.
C) Liabilities.
D) Owner's Equity.
E) Expenses.
124) Increases in equity from a company's sales of products or services are:
A) Assets.
B) Revenues.
C) Liabilities.
D) Owner's Equity.
E) Expenses.
125) The difference between a company's assets and its liabilities, or net assets is:
A) Net income.
B) Expense.
C) Equity.
D) Revenue.
E) Net loss.
126) Creditors' claims on the assets of a company are called:
A) Net losses.
B) Expenses.
C) Revenues.
D) Equity.
E) Liabilities.
127) Decreases in equity from costs of providing products or services to customers are called:
A) Liabilities.
B) Equity.
C) Withdrawals.
D) Expenses.
E) Owner's Investment.
128) The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:
A) Income statement equation.
B) Accounting equation.
C) Business equation.
D) Return on equity ratio.
E) Net income.
129) Revenues are:
A) The same as net income.
B) The excess of expenses over assets.
C) Resources owned or controlled by a company.
D) The increase in equity from a company's sales of products and services.
E) The costs of assets or services used.
130) If assets are $99,000 and liabilities are $32,000, then equity equals:
A) $32,000.
B) $67,000.
C) $99,000.
D) $131,000.
E) $198,000.
131) Another name for equity is:
A) Net income.
B) Expenses.
C) Net assets.
D) Revenue.
E) Net loss.
132) When expenses exceed revenues, the result is called:
A) Net assets.
B) Negative equity.
C) Net loss.
D) Net income.