Question

9:46 Class Test Reviewer.docx Chapter 1, 2& 3 1) Assets are equal to A) liabilities + owner's equity. B) liabilities - owner's equity. C) liabilities - revenues. D) revenues - expenses. 2) Sonya invested cash in her new business. What effect will this have? A) Increase an asset and increase a liability. B) Decrease an asset and increase a liability. C) Increase an asset and increase owner's equity. D) Increase an asset and decrease owner's equity. 3) Kal's Vegan Restaurant, with total assets of $80,000, borrows $25,000 from the bank. Which of the following is a TRUE statement upon borrowing the money? A) Total assets are now $105,000. B) Total assets are now $80,000. C) Total assets are now $25,000. D) Total assets are now $55,000 4) If total assets are $30,000 and total liabilities are $8,000, Capital must equal A) $22,000. B) $38,000. C) $8,000. D) $30,000 5) If the beginning capital was $14,000 and in a fiscal period there was revenue of $8,000, withdrawals of $3,000, and expenses of $1,500 then the ending capital would be A) $26,500. B) $23,500. C) $17,500 D) $20,500

Answer 1

1. Assets are equal to

Answer : A. Liabilities + owner's equity.

2. Sonia invested cash in her new business.

Answer : A. Increase an asset ( cash ) & increase a liability ( owner's capital ).

3. Total Assets. $ 80,000

Borrows ( cash ). 25,000

Total assets. $ 105,000

4. Assets = Liabilities + capital

$30,000 = $8,000 + capital

Capital = $ 22,000.

5. Begining capital. $ 14,000

Add : Net Income. 6,500

( $8000 – $1500 )

Less: withdrawals. 3,000

Ending capital. $ 17,500