Accounting Equations
Purchase of machinery for cash:
Increases total assets
Decreases total assets
Keeps total assets unchanged
Increases assets and liabilities
Keeps total assets unchanged
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Closing stock and sundry debtors are examples of:A. Fixed assets
B. Fictitious assets
C. Current assets
D. None of the above
If total assets increase by $20,000 and total liabilities increase by $12,000, the capital will:
A. Increase by $32,000
B. Increase by $8,000
C. Decrease by $32,000
D. Decrease by $8,000
Merchandise costing $1,000 are sold for $1,250. This will increase owner’s equity by:
A. $1,000
B. $1,250
C. $250
D. None of the above
Expenses paid by a business decrease:
A. Cash
B. Capital
C. Cash and capital
D. Capital and accounts payable
The excess of assets over liabilities is:
A. Capital
B. Profit
C. Equity
D. Accounts payable
A sole trader increases the business’s number of motor vehicles by adding his own car to its fleet. Which elements of the accounting equation will change due to this transaction?”
A. Assets only
B. Capital only
C. Assets and capital
D. Assets and liabilities
A sole trader is $5,000 overdrawn at the bank and receives $1,000 from a credit customer in respect of its account. Which elements of the accounting equation will change due to this transaction?
A. Assets and liabilities only
B. Liabilities only
C. Assets only
D. Assets, liabilities, and capital
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