Question

MC Questions point) Circle the best answer 1. The right side of a ccount is in A) Debit. B) Increase C) Credit. D) Decrease E) Account balance 2. the entity will remain in operation for the foreseeable future. This is the A) Matching principle. B) Revenue recognition principle. C) Time period principle. D) Accrual reporting principle. E) Going-concern assumption. 3. At the end of a recent year, Kuwait Cleaning Services (KCS), had total assets of KD 3630 and equity of KD 2.280. How much were KCS's liabilities? A) KD 5,910 B) KD 3,630 TA - 2- 3,630 - L. 3,280 3,630-2,200 C) KD 1,350 D) KD 2,280 E) KD 4,980 KD 180. How 4. Assume that KCS performed cleaning services for a department store on account would this transaction affect KCS's accounting equation? +E A) Increase both assets and liabilities by KD 180 B) Increase both assets and equity by KD 180 C) Increase both liabilities and equity by KD 180 D) Decrease liabilities by KD 180 and increase equity by KD 180

Answer 1

Part - 1

Right side of a T- account is called as Credit side whereas Left side is called as Debit side.Correct answer is C

Part - 2

Going concern assumption assumes that the entity will continue its operation during the foreseeable future year and will not liquidate or discontinue its operations due to any reason. So the Correct answer is E.

Part - 3

Liabilities = Total Assets - Total Equity

= 3,630 - ,2,280

=KD 1.350

Correct Answer is C

Part -4

As KCS has performed the cleaning services on account , it means that the payment to them for the services provided has not been made and hence the departmental store will be included in the debtor list. Also on the other side it will be credited in the profit and loss account hence increasing the equity.

Hence this transaction will increase both the assets and equity by KD 180.

So the correct answer is B