TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-21 The Accounting Equation
78. The accounting equation is the link between a company's assets, liabilities and equity.
FALSE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-21 The Accounting Equation
79. The accounting equation can be restated as assets - equity = liabilities.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-21 The Accounting Equation
80. Liabilities represent non-owner financing.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-21 The Accounting Equation
81. Business transactions are exchanges of economic consideration between two parties.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
82. Business events do not affect the accounting equation.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
83. The purchase of supplies for cash impacts both the investing and financing sides of the accounting equation.
FALSE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-21 The Accounting Equation
84. Items such as sales slips, invoices, cheques, purchase orders, and employee earnings records are also called source documents.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
85. Payment of accounts payable decreases both liabilities and assets.
TRUE
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
Multiple Choice Questions
86. Joe Bob has prepared the following analysis of September transactions for his business, Joe Bob's Spareribs. Unfortunately, he has lost some information. Calculate the missing information.
Date
Cash
A/R
Inventory
A/P
Notes Pay
Equity
Sep 2
4,000
2,100
1,000
?
500
4,000
Sep 6
-1,000
-0-
4,000
?
-0-
-0-
Sep 10
500
300
-300
-0-
-0-
?
A.
Sept 2
Sept 6
Sept 10
2,600
3,000
2,000
B.
Sept 2
Sept 6
Sept 10
1,000
4,000
200
C.
Sept 2
Sept 6
Sept 10
300
2,000
600
D.
Sept 2
Sept 6
Sept 10
1,500
1,000
400
E.
Sept 2
Sept 6
Sept 10
2,600
3,000
500
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Hard
Learning Objective: 01-07 Analyze business transactions by applying the accounting equation.
Topic: 01-22 Transaction Analysis
87. At the end of its first year of operations, Lockerbie and Role Company has total assets of $3,000,000 and total liabilities of $1,200,000. The owner originally invested $200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year's profit for Lockerbie and Role Company?
A. $1,600,000
B. $1,800,000
C. $1,000,000
D. $3,000,000
E. $3,200,000