E) A liability.
133) A resource that the owner takes from the company is called a(n):
A) Liability.
B) Withdrawal.
C) Expense.
D) Contribution.
E) Investment.
134) Distributions of cash or other resources by a business to its owners are called:
A) Withdrawals.
B) Expenses.
C) Assets.
D) Retained earnings.
E) Net Income.
135) The assets of a company total $700,000; the liabilities, $200,000. What is the amount of equity?
A) $900,000.
B) $700,000.
C) $500,000.
D) $200,000.
E) It is impossible to determine unless the amount of the owners' investment is known.
136) On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of May 31 of the current year?
A) $49,700.
B) $13,050.
C) $20,500.
D) $31,100.
E) $40,400.
137) On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the amount of owner's equity as of August 31 of the current year?
A) $49,100.
B) $32,100.
C) $12,100.
D) $10,900.
E) $30,900.
138) Assets created by selling goods and services on credit are:
A) Accounts payable.
B) Accounts receivable.
C) Liabilities.
D) Expenses.
E) Equity.
139) An exchange of value between two entities that yields a change in the accounting equation is called:
A) The accounting equation.
B) Recordkeeping or bookkeeping.
C) An external transaction.
D) An asset.
E) Net Income.
140) Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
A) Assets, $30,000 increase; equity, $30,000 increase.
B) Assets, $30,000 decrease; liabilities, $30,000 decrease.
C) Assets, $30,000 decrease; liabilities, $30,000 increase.
D) Liabilities, $30,000 decrease; equity, $30,000 increase.
E) Assets, $30,000 decrease; equity $30,000 decrease.
141) If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:
A) Accounts payable decreases $10,000.
B) Accounts payable increases $10,000.
C) Cash increases $10,000.
D) Revenue increases $10,000.
E) Revenue decreases $10,000
142) Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation?
A) Assets increase by $75,000 and expenses increase by $75,000.
B) Assets increase by $75,000 and expenses decrease by $75,000.
C) Liabilities increase by $75,000 and expenses decrease by $75,000.
D) Assets decrease by $75,000 and expenses decrease by $75,000.
E) Assets increase by $75,000 and liabilities increase by $75,000.
143) Contessa Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:
A) Total assets decrease and equity increases.
B) Both total assets and total liabilities decrease.
C) Total assets, total liabilities, and total equity are unchanged.
D) Both total assets and equity are unchanged and liabilities increase.
E) Total assets increase and equity decreases.
144) If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:
A) Decreased $105,000.
B) Decreased $45,000.
C) Increased $30,000.
D) Increased $45,000.
E) Increased $105,000.
145) If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:
A) Increased $22,000.
B) Decreased $22,000.
C) Increased $89,000.
D) Decreased $156,000.
E) Increased $156,000.
146) If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?
A) Assets would have increased $55,000.
B) Assets would have decreased $55,000.
C) Assets would have increased $93,000.
D) Assets would have decreased $93,000.
E) None of the above.
147) If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?