Financial Accounting 9th Edition by Miller-Nobles Test bank

Assets increase by $140,000; liabilities decrease by $116,000.

Assets increase by $116,000; liabilities increase by $116,000.

Assets increase by $140,000; liabilities decrease by $24,000.

Assets increase by $116,000; equity increases by $116,000.

Answer: B
Difficulty: Complex
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

41. Star Homes Ltd just recorded a transaction in its books of accounts. If this transaction increased the total liabilities by $12,000:

1. assets or equity must decrease by $12,000
2. assets must decrease by $12,000
3. assets must increase or equity must decrease by $12,000
4. both assets and equity must each decrease by $6000

Answer: C
Difficulty: Complex
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

42. Sharon Samson owns Reliable Waterworks which provides plumbing services. Transactions of Reliable Waterworks during the first year of operations are given below:

1. Sharon contributed $11,000 into a new cheque account for the business and recorded a capital contribution.
2. Paid $1200 for equipment to be used for plumbing repairs.
3. Borrowed $10,000 from a local bank and deposited the money in the cheque account.
4. Paid $400 as rent for the year.
5. Paid $500 for plumbing supplies to be used on various jobs in the future.
6. Completed a plumbing repair project for a local lawyer and received $3400.

Calculate the amount of total assets balance at the end of the first year.

1. $1700
2. $24,000
3. $21,000
4. $1200

Answer: B
Difficulty: Complex
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

43. Sharon Samson starts a plumbing service called Reliable Waterworks. Transactions of Reliable Waterworks during the first year of operations are given below:

1. Sharon deposited $10,000 into a new cheque account for the business and recorded the capital contribution.
2. Paid $1200 cash for equipment to be used for plumbing repairs.
3. Borrowed $14,000 from a local bank and deposited the money in the cheque account.
4. Paid $400 rent for the year.
5. Purchased $300 of office supplies by cash.
6. Completed a plumbing repair project for a local lawyer and received $3500 cash.

Calculate the amount of total liabilities at the end of the first year.

1. $14,000
2. $22,800
3. $3500
4. $10,000

Answer: A
Difficulty: Moderate
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

44. Robinson starts a plumbing service named Crusoe Waterworks. Transactions of Crusoe Waterworks during the first year of operations are given below:

1. Robinson deposited $8000 into a new cheque account for the business and recorded the capital contribution.
2. Paid $2000 cash for equipment to be used for plumbing repairs.
3. Borrowed $29,000 from a local bank and deposited the money in the cheque account.
4. Paid $700 rent for the year.
5. Purchased $1500 of office supplies on credit.
6. Completed a plumbing repair project for a local lawyer and received $3000 cash.

Calculate the amount of total owners' equity after recording the transactions.

1. $8000
2. $10,300
3. $29,000
4. $3000

Answer: B
Difficulty: Complex
AACSB: Analytical Thinking