Reference no: EM1316088

Multiple questions on accounting principles.

1.  Gross increases in owner's equity that can be attributed to ongoing business activities are:

a.         Expenses

b.        Drawings

c.         Revenues

d.        Assets

2.  Equipment is purchased with a cash down payment of $60,000 and a signed note for $100,000. The net effect of this transaction will be:

a.         An increase in assets of $60,000

b.        An increase in assets of $100,000

c.         An increase in assets of $160,000

d.        No increase in assets.

3.  A note payable is given to settle an existing account payable. The result of this transaction on the accounting records is:

a.         No change in assets, liabilities, or owners' equity

b.        Total Assets are increased

c.         Total Liabilities are increased

d.        Total Owner's Equity is increased

4.  Carter Cleaning completed the following transactions: Purchased $18,000 of Office Supplies for $8,000 cash and the remainder on credit. Purchased equipment for $7,950 on credit. As a result of these transactions, Carter's total assets will:

a.         Increase by $25,950

b.        Increase by $17,950

c.         Increase by $10,050

d.        Increase by $ 7,950

5.  Ford Photo Supplies balances at the beginning of January were: Cash $25,000; Accounts Receivable $15,000; Inventory $30,000; Accounts Payable $18,000; Notes Payable $17,000; Owner's Capital $??. Ford completed the following transactions during January: Paid off the note payable of $17,000. Sold $36,525 of merchandise to customers on account. Cost of goods sold was $21,250. Paid accounts payable of $3,500. Collected $25,000 of the amounts due from customers. As a result of these transactions, liabilities and owners' equity at the end of January will total:

a.         Liabilities: $35,000; Owner's Equity: $35,000

b.        Liabilities: $31,500; Owner's Equity: $71,525

c.         Liabilities: $14,500; Owner's Equity: $50,275

d.        Liabilities: $18,000; Owner's Equity: $15,275

6.  Ford Photo Supplies balances at the beginning of January were: Cash $25,000; Accounts Receivable $15,000; Inventory $30,000; Accounts Payable $18,000; Notes Payable $17,000; Owner's Capital $??. Ford completed the following transactions during January: Paid off the note payable of $17,000. Sold $36,525 of merchandise to customers on account. Cost of goods sold was $21,250. Paid accounts payable of $3,500. Collected $25,000 of the amounts due from customers. As a result of these transactions, asset balances at the end of January will total:

a.         Cash: $ 4,500; Accts Rec.: $51,525; Inventory: $ 8,750

b.        Cash: $ 8,000; Accts Rec.: $15,000; Inventory: $30,000

c.         Cash: $ 4,500; Accts Rec.: $26,525; Inventory: $21,250

d.        Cash: $29,500; Accts Rec.: $26,525; Inventory: $ 8,750

7.   At the beginning of October, Nirvana Carting had total assets of $86,000. During October, Nirvana had the following transactions: Collected receivables of $17,400 from previous periods. Generated revenues of $50,000, of which 60 percent were cash. Incurred total expenses of $36,000, 40 percent of which were paid. After these transactions are recorded, Nirvana's total assets amount to:

a.         $ 97,400

b.        $121,600

c.         $133,400

d.        $139,000

8.   At the beginning of October, Nirvana Carting had total assets of $86,000. During October, Nirvana had the following transactions: Collected the opening receivables balance of $17,400. Generated revenues of $50,000, of which 60 percent were cash. Incurred total expenses of $36,000, 40 percent of which were paid. Nirvana had no payables balance at the beginning of October. After these transactions are recorded, Nirvana's Accounts Receivable and Accounts Payable amount to:

a.         Accounts Rec.: $ -0-; Accounts Pay.: $ -0-

b.        Accounts Rec.: $ 17,400; Accounts Pay.: $14,400

c.         Accounts Rec.: $ 20,000; Accounts Pay.: $21,600

d.        Accounts Rec.: $ 37,400; Accounts Pay.: $30,000

9.  At the beginning of October, Nirvana Carting had total owner's equity of $86,000. During October, Nirvana had the following transactions: Collected the opening receivables balance of $17,400. Generated revenues of $50,000, of which 60 percent were cash. Incurred total expenses of $36,000, 40 percent of which were paid. Nirvana had no payables balance at the beginning of October. After these transactions are recorded, Nirvana's Owner's Equity balance amounts to:

a.         $ 14,000

b.        $ 86,000

c.         $ 135,000

d.        $ 100,000

10.  On May 1, Ace Cleaners had total assets of $438,500. During May, the company completed the following transactions: Kerry Ace, owner of the firm, donated equipment to Ace Cleaners. The equipment had a value of $3,350 at this time. Purchased a building for $39,000 and signed a note for the purchase. Purchased $750 of supplies on credit. After these transactions are recorded, total assets will have a balance of:

a.         $481,600

b.        $481,500

c.         $480,850

d.        $472,850